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FIDIC



FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS

CONDITIONS OF CONTRACT

FOR DESIGN – BUILD

AND TURNKEY

PART I GENERAL CONDITIONS

PART II GUIDANCE FOR THE PREPARATION OF

CONDITIONS OF PARTICULAR APPLICATION

WITH FORMS OF TENDER AND AGREEMENT AND

FIDIC MODEL TERMS FOR THE APPOINTMENT OF A

DISPUTE ADJUDICATION BOARD



ACKNOWLEDGEMENTS

Fédération Internationale des Ingénieurs-Conseils (FIDIC) extends special thanks to the followingmembers of its “Orange Book” Task Group: Axel-Volkmar Jaeger (Task Group Leader), Schmidt Reuter

Partner, Germany; Peter L Booen, Sir Alexander Gibb & Partners Ltd, UK; Philip Jenkinson, W S Atkins, UK; Bob

Kavanagh, Stanley Industrial Consultants Ltd, Canada; and Charles B Molineaux, Wickwire Gavin PC, USA.

Various drafts were reviewed by the following persons or organisations: Peter Batty, TAMSConsultants Inc., USA; Geoffrey F Hawker, Consulting Engineer, UK; Joseph A Huse, Freshfields,France; Gordon L Jaynes, Whitman Breed Abbott & Morgan, UK; A E J (Tony) Sanders, MouchelManagement Ltd,UK; R J (Rob) Falconi, Delcan Corporation, Canada; Harold Fairfull, European Capital,UK; Martyn J Nixon, Willis Corroon, UK; Per Fagerholt, COWIConsult A/S, Denmark; ChristopherWade, VBB VIAK AB, Sweden; Dr Grossekatthöfer, Germany; David R Wightman and AndrewInkester, Nabarro Nathanson, UK; Christopher R Seppala, White & Case, France; Mark Griffiths,Griffiths & Armour, UK; A J M (Tony) Blackler, Rowe & Maw, UK; the World Bank; and theInternational Bar Association.

The preparation was carried out under the general direction of the FIDIC Contracts Committee comprisingK B (Tony) Norris, Consulting Engineer, UK (Chairman); Michael Mortimer-Hawkins, SwedPowerAB, Sweden; and John B Bowcock, Sir Alexander Gibb & Partners Ltd, UK.

FIDIC wishes to record its appreciation of the time and effort devoted by all the above.

The ultimate decision on the form and content of the document rests with FIDIC.



FOREWORD

The terms of the Conditions of Contract for Design-Build and Turnkey have been prepared by theFédération Internationale des Ingénieurs-Conseils (FIDIC) and are recommended for general use for the purpose of the design and construction of works where tenders are invited on an international basis;with minor modifications, the Conditions are also suitable for use on domestic contracts. There are nouniversally-accepted definitions of the terms “design-build” and “turnkey”, except that both involve theContractor’s total liability for design. For the Employer, such single-point responsibility may beadvantageous, but the benefits may be offset by having less control over the design process and moredifficulty in imposing varied requirements.

Under the usual arrangements for a design-build contract, the Contractor is responsible for the designand provision, in accordance with the Employer’s requirements, of works which may include anycombination of engineering (including civil, mechanical, electrical, etc) and building works; andinterim payments are made as construction proceeds. In Part I, Clause 13 sets out the paymentarrangements.

The Conditions are also intended for use on turnkey contracts, under which the Employer’srequirements usually include provision of a fully-equipped facility, ready for operation (at the turn ofthe “key”); such contracts are often contractor-financed. Turnkey contracts typically include design,construction, fixtures, fittings and equipment, the scope of which would be defined in other contract

documents. In addition, the contract may impose a requirement for the Contractor to operate the Works,either for a few months' commissioning period, or for some years’ operation on a build-operate-transfercontract. Advice on turnkey arrangements is included in Part II, together with sample wording forcontractor-finance.

The version in English of the Conditions is considered by FIDIC as the official and authentic text forthe purposes of translation.

In the preparation of the Conditions it was recognised that, while there are many sub-clauses which will be generally applicable, there are some sub-clauses which must necessarily vary to take account of thecircumstances relevant to the particular contract. The sub-clauses which were considered to beapplicable to the majority of contracts have therefore been presented in Part I - General Conditions,

which will facilitate their incorporation into the contract. Part I - General Conditions and Part II -Conditions of Particular Application will together comprise the Conditions governing the rights andobligations of the parties. It will be necessary to prepare the Part II for each individual contract, taking particular account of the references to Part II which are contained in some sub-clauses in Part I.

In order to assist in the preparation of Part II and the other tender documents, explanatory material andexample wording are published with these Conditions in the Guidance for the Preparation ofConditions of Particular Application. More detailed guidance will be included in a guide to the use ofthese conditions, to be published by early 1996.




CONDITIONS OF CONTRACT

FOR DESIGN – BUILD

AND TURNKEY

PART I GENERAL CONDITIONS

FIRST EDITION 1995

ISBN 2-88432-010-5



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CONTENTS

PART 1: GENERAL CONDITIONS

1 THE CONTRACT ...................................................................................... 1

1.1 Definitions

1.2 Headings and Marginal Notes1.3 Interpretation1.4 Law and Language1.5 Contract Agreement1.6 Priority of Documents1.7 Documents on Site1.8 Communications1.9 Provision of Construction Documents1.10 Employer’s Use of Contractor's Documents1.11 Contractor’s Use of Employer's Documents1.12 Confidential Details1.13 Compliance with Statutes, Regulations and Laws1.14 Joint and Several Liability

2 THE EMPLOYER ..................................................................................... 6

2.1 General Obligations

2.2 Access to and Possession of the Site

2.3 Permits, Licences or Approvals

2.4 Employer's Entitlement to Terminate

3 THE EMPLOYER’S REPRESENTATIVE............................................... 6

3.1 Employer’s Representative’s Duties and Authority

3.2 Requirements for Employer’s Representative3.3 Employer’s Representative’s Authority to Delegate

3.4 Employer’s Representative’s Instructions3.5 Employer's Representative to Attempt Agreement

4 THE CONTRACTOR ................................................................................. 7


4.2 Performance Security4.3 Contractor’s Representative4.4 Co-ordination of the Works4.5 Subcontractors4.6 Assignment of Subcontractor’s Obligations4.7 Setting Out4.8 Quality Assurance

4.9 Site Data4.10 Matters Affecting the Execution of the Works4.11 Unforeseeable Sub-Surface Conditions4.12 Access Route4.13 Rights of Way and Facilities4.14 Programme4.15 Progress Reports4.16 Contractor’s Equipment4.17 Safety Precautions4.18 Protection of the Environment4.19 Electricity, Water and Gas

4.20 Employer Supplied Machinery and Materials



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4.21 Clearance of Site

4.22 Security of the Site

4.23 Contractor’s Operations on Site

4.24 Fossils

5 DESIGN .................................................................................................... 14


5.2 Construction Documents

5.3 Contractor’s Undertaking5.4 Technical Standards and Regulations

5.5 Samples

5.6 As-Built Drawings

5.7 Operation and Maintenance Manuals

5.8 Error by Contractor

5.9 Patent Rights

6 STAFF AND LABOUR ............................................................................ 17

6.1 Engagement of Staff and Labour

6.2 Rates of Wages and Conditions of Labour

6.3 Persons in the Service of Others

6.4 Labour Laws

6.5 Working Hours

6.6 Facilities for Staff and Labour

6.7 Health and Safety

6.8 Contractor’s Superintendence

6.9 Contractor’s Personnel

6.10 Disorderly Conduct

7 PLANT, MATERIALS AND WORKMANSHIP .................................... 18

7.1 Manner of Execution

7.2 Delivery to Site

7.3 Inspection

7.4 Testing

7.5 Rejection

7.6 Ownership of Plant and Materials

8 COMMENCEMENT, DELAY AND SUSPENSION .............................. 20

8.1 Commencement of Works

8.2 Time for Completion

8.3 Extension of Time for Completion

8.4 Delays Caused by Authorities

8.5 Rate of Progress

8.6 Liquidated Damages for Delay

8.7 Suspension of Work

8.8 Consequences of Suspension

8.9 Payment for Plant and Materials in Event of Suspension

8.10 Prolonged Suspension

8.11 Resumption of Work

9 TEST ON COMPLETION ...................................................................... 23

9.1 Contractor’s Obligations

9.2 Delayed Tests

9.3 Retesting

9.4 Failure to Pass Tests on Completion



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10 EMPLOYER’S TAKING OVER ............................................................ 23

10.1 Taking-Over Certificate

10.2 Use by the Employer

10.3 Interference with Tests on Completion

11 TEST ON COMPLETION ...................................................................... 25

11.1 Employer’s Obligations

11.2 Delayed Tests

11.3 Retesting11.4 Failure to Pass Tests after Completion

12 DEFECTS LIABILITY ............................................................................ 26

12.1 Completion of Outstanding Work and Remedying Defects

12.2 Cost of Remedying Defects

12.3 Extension of Contract Period

12.4 Failure to Remedy Defects

12.5 Removal of Defective Work

12.6 Further Tests

12.7 Right of Access

12.8 Contractor to Search12.9 Performance Certificate

12.10 Unfulfilled Obligations

13 CONTRACT PRICE AND PAYMENT .................................................. 28

13.1 The Contract Price

13.2 Advance Payments

13.3 Application for Interim Payment Certificates

13.4 Schedule of Payments

13.5 Plant and Materials for the Permanent Works

13.6 Issue of Interim Payment Certificates

13.7 Payment13.8 Delayed Payment

13.9 Payment of Retention Money

13.10 Statement at Completion

13.11 Application for Final Payment Certificate

13.12 Discharge

13.13 Issue of Final Payment Certificate

13.14 Cessation of Employer's Liability

13.15 Calculation of Payments in Foreign Currency

13.16 Changes in Legislation

14 VARIATIONS .......................................................................................... 34

14.1 Right to Vary

14.2 Value Engineering

14.3 Variation Procedure

14.4 Payment in Applicable Currencies

14.5 Provisional Sums

15 DEFAULT OF CONTRACTOR ............................................................. 35

15.1 Notice to Correct

15.2 Termination

15.3 Valuation at Date of Termination

15.4 Payment after Termination15.5 Bribes



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16 DEFAULT OF EMPLOYER ................................................................... 3616.1 Contractor’s Entitlement to Suspend Work

16.2 Termination

16.3 Cessation of Work and Removal of Contractor's Equipment

16.4 Payment on Termination

17 RISK AND RESPONSABILITY ............................................................. 3817.1 Indemnity

17.2 Contractor’s Care of the Works

17.3 Employer’s Risks17.4 Consequences of Employer’s Risks

17.5 Contractor’s Risks

17.6 Limitation of Liability

18 INSURANCE ............................................................................................ 4018.1 Insurance for Design

18.2 Insurance for Works and Contractor’s Equipment

18.3 Insurance against Injury to Persons and Damage to Property

18.4 Insurance for Workers

18.5 General Requirements for Insurances

19 FORCE MAJEURE ................................................................................. 4119.1 Definition of Force Majeure

19.2 Effect of Force Majeure Event

19.3 Contractor's Responsibility

19.4 Employer's Responsibility

19.5 Payment to Contractor

19.6 Optional Termination, Payment and Release

19.7 Release from Performance under the Law

20 CLAIMS, DISPUTE AND ARBITRATION ........................................... 4320.1 Procedure for Claims

20.2 Payment of Claims

20.3 Dispute Adjudication Board

20.4 Procedure for Obtaining Dispute Adjudication Board's Decision

20.5 Amicable Settlement

20.6 Arbitration

20.7 Failure to Comply with Dispute Adjudication Board’s Decision

20.8 Expiry of Dispute Adjudication Board’s Appointment

INDEX

ADDENDUM

FIDIC Model Terms of Appointment for a Dispute Adjudication Board

TERMS OF APPOINTMENT FOR A BOARD OF THREE MEMBERS

Appendix A: PROCEDURAL RULES OF THE DISPUTE ADJUDICATION BOARD (OF THREE

MEMBERS)

TERMS OF APPOINTMENT FOR A BOARD OF ONE MEMBER

Appendix A: PROCEDURAL RULES OF THE DISPUTE ADJUDICATION BOARD (OF ONE MEMBER)



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PART I - GENERAL CONDITIONSTHE CONTRACT

1 The Contract

Definitions 1.1 In the Contract (as defined below) the words and expressions defined belowshall have the meanings assigned to them, except where the context requires

otherwise:

1.1.1 Documents

1.1.1.1 “Contract” means these Conditions of Contract (Parts I and II), the

Employer’s Requirements, the Tender, the Contractor’s Proposal, the

Schedules, the Letter of Acceptance, the Contract Agreement (if

completed) and such further documents as may be expressly

incorporated in the Letter of Acceptance or Contract Agreement (if

completed).

1.1.1.2 “Employer’s Requirements” means the description of the scope,

standard, design criteria (if any) and programme of work, as included

in the Contract, and any alterations and modifications thereto in

accordance with the Contract.1.1.1.3 “Tender” means the Contractor’s priced offer to the Employer for the

Works, as accepted by the Letter of Acceptance.

1.1.1.4 “Appendix to Tender” means the completed appendix comprised in

the Tender.

1.1.1.5 “Contractor’s Proposal” means the preliminary design submitted with

the Tender, as included in the Contract.

1.1.1.6 “Schedules” means the information and data submitted with the

Tender, as included in the Contract.

1.1.1.7 “Schedule of Payments” means the Schedule designated as such (ifany), referred to in Sub-Clause 13.4.

1.1.1.8 “Letter of Acceptance” means the formal acceptance by the Employer

of the Tender.

1.1.1.9 “Contract Agreement” means the contract agreement (if any) referred

to in Sub-Clause 1.5.

1.1.2 Persons

1.1.2.1 “Employer” means the person named as such in the Appendix to

Tender and the legal successors in title to such person, but not (except

with the consent of the Contractor) any assignee of such person.

1.1.2.2 “Contractor” means the person whose Tender has been accepted by

he Employer and the legal successors in title to such person, but not

(except with the consent of the Employer) any assignee of such

person.

1.1.2.3 “Employer’s Representative” means the person appointed by the

Employer to act as Employer's Representative for the purposes of the

Contract and named as such in the Appendix to Tender, or other

person appointed from time to time by the Employer and notified as

such to the Contractor.



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1.1.2.4 “Contractor’s Representative” means the person (if any) named as

such in the Contract or other person appointed from time to time by

the Contractor under Sub-Clause 4.3.

1.1.2.5 “Subcontractor” means any person named in the Contract as

a subcontractor, manufacturer or supplier for a part of the Works or any

person to whom a part of the Works has been subcontracted in

accordance with Sub-Clause 4.5, and the legal successors in title to

such person, but not any assignee of such person.

1.1.2.6 “Dispute Adjudication Board” means the person or persons named as

such in the Contract, or other person or persons appointed from time

to time under Sub-Clause 20.3.

1.1.3 Dates, Times and Periods

1.1.3.1 “Base Date” means the date 28 days prior to the latest date for

submission of the Tender for acceptance by the Employer.

1.1.3.2 “Effective Date” means the date on which the Contract entered into

legal force and effect.

1. 1.3.3 “Commencement Date” means the date on which the Contractor

receives the notice to commence issued by the Employer’sRepresentative under Sub-Clause 8.1.

1.1.3.4 “Time for Completion” means the time for completing the Works or

a Section (as the case may be), and passing the Tests on Completion,

as stated in the Appendix to Tender (or as extended under Sub-

Clause 8.3), calculated from the Commencement Date.

1.1.3.5 “Contract Period” means the period from the Commencement Date to

the date 365 days after the date on which the whole of the Works shall

have been completed as certified by the Employer’s Representative

under Clause 10 (or as extended under Sub-Clause 12.3).

1.1.3.6 “day” means a calendar day and “year” means 365 days.1.1.4 Tests and Completion

1.1.4.1 “Tests on Completion” means the tests specified in the Contract and

designated as such, and any other such tests as may be agreed by the

Employer’s Representative and the Contractor or instructed as a

Variation, which are to be carried out before the Works or any Section

are taken over by the Employer.

1.1.4.2 “Taking-Over Certificate” means a certificate issued under Clause 10.

1.1.4.3 “Tests after Completion” means the tests specified in the Contract and

designated as such, which are to be carried out after the Works or any

Section are taken over by the Employer.

1.1.4.4 “Performance Certificate” means the certificate issued by

the Employer’s Representative under Sub-Clause 12.9.

1.1.5 Money and Payments

1.1.5.1 “Contract Price” means the sum stated in the Letter of Acceptance as

payable to the Contractor for the design, execution and completion of

the Works and the remedying of any defects in accordance with the

provisions of the Contract.



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1.1.5.2 “Local Currency” means the currency of the Country.

1.1.5.3 “Foreign Currency” means a freely convertible currency, named in the

Appendix to Tender as a currency in which part of the Contract Price is

payable, but not the Local Currency.

1.1.5.4 “Retention Money” means the accumulated retention monies retained

by the Employer under Sub-Clause 13.3.

1.1.5.5 “Provisional Sum” means a sum (if any) specified in the Contract and

designated as such, for the execution of any part of the Works or forthe supply of Plant, Materials or services.

1.1.5.6 “Cost” means all expenditure properly incurred (or to be incurred) by

the Contractor, whether on or off the Site, including overhead and

similar charges, but does not include profit.

1.1.5.7 “Interim Payment Certificate” means any payment certificate issued

by the Employer’s Representative under Clause 13, other than the

Final Payment Certificate.

1.1.5.8 “Final Payment Certificate” means the payment certificate issued by

the Employer’s Representative under Sub-Clause 13.13.

1.1.5.9 “Final Statement” means the agreed statement defined in Sub-

Clause 13.11.

1.1.6 Other Definitions

1.1.6.1 “Construction Documents” means all drawings, calculations,

computer software (programs), samples, patterns, models, operation

and maintenance manuals, and other manuals and information of a

similar nature, to be submitted by the Contractor.

1.1.6.2 “Variation” means any alteration and/or modification to the

Employer’s Requirements, which is instructed by the Employer’s

Representative or approved as a variation by the Employer’s

Representative, in accordance with Clause 14.

1.1.6.3 “Works” means the Permanent Works and the Temporary Works or

either of them as appropriate.

1.1.6.4 “Permanent Works” means the permanent works to be designed and

executed in accordance with the Contract.

1.1.6.5 “Temporary Works” means all temporary works of every kind (other

than Contractor’s Equipment) required for the execution and

completion of the Works and the remedying of any defects.

1.1.6.6 “Plant” means machinery and apparatus intended to form or forming part of the Permanent Works, including the supply-only items (if any)

which are to be supplied by the Contractor as specified in the Contract.

1.1.6.7 “Materials” means things of all kinds (other than Plant) to be provided

and incorporated in the Permanent Works by the Contractor, including

the supply-only items (if any) which are to be supplied by the

Contractor as specified in the Contract.

1.1.6.8 “Contractor’s Equipment” means all machinery, apparatus and other

things (other than Temporary Works) required for the execution and

completion of the Works and the remedying of any defects, but does

not include Plant, Materials, or other things intended to form orforming part of the Permanent Works.



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1.1.6.9 “Section” means a part of the Works specifically defined in the Appendix to

Tender as a Section (if any).

1.1.6.10 “Site” means the places provided by the Employer where the Works

are to be executed and to which Plant and Materials are to be

delivered, and any other places as may be specifically designated in

the Contract as forming part of the Site.

1.1.6.11 “Country” means the country in which the Works are to be executed

and to which Plant and Materials are to be delivered.

Headings and 1.2 The headings and marginal notes are not part of these Conditions, and shall not

Marginal Notes be taken into consideration in their interpretation.

Interpretation 1.3 Words importing persons or parties shall include firms and corporations and

any organization having legal capacity. Words importing the singular also

include the plural and vice versa where the context requires. Words importing

one gender also include other genders.

Law and Language 1.4 The law of the Contract is named in the Appendix to Tender.

Where versions of the Contract are prepared in different languages, the version

which is in the ruling language named in the Appendix to Tender shall prevail.

The language for day to day communications shall be as stated in the Appendix

to Tender.

Contract Agreement 1.5 Either party shall, if requested by the other party, execute a Contract

Agreement, in the form annexed with such modifications as may be necessary

to record the Contract. The costs of stamp duties and similar charges imposed

by law shall be borne by the Employer.

Priority of 1.6 The documents forming the Contract are to be taken as mutually explanatory

Documents of one another. If there is an ambiguity or discrepancy in the documents, the

Employer's Representative shall issue any necessary clarification or instruction

to the Contractor, and the priority of the documents shall be as follows:

(a) The Contract Agreement;

(b) The Letter of Acceptance;

(c) The Employer’s Requirements;

(d) The Tender;

(e) The Conditions of Contract, Part II;

(f) The Conditions of Contract, Part I;

(g) The Schedules; and

(h) The Contractor’s Proposal.

Documents on Site 1.7 The Contractor shall keep on the Site one complete set of the documents

forming the Contract, the Construction Documents, Variations, othercommunications given or issued under Sub-Clause 1.8 and the documents

mentioned in Sub-Clause 5.4. The Employer, the Employer’s Representative

and assistants (as referred to in Sub-Clause 3.3) shall have the right to use such

documents at all reasonable times.

Communications 1.8 Wherever provision is made for the giving or issue of any notice, instruction,

consent, approval, certificate or determination by any person, unless otherwise

specified such communication shall be in writing and shall not be unreasonably

withheld or delayed.



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Wherever provision is made for a communication to be "written" or "in

writing", this means any hand-written, type-written or printed communication,

including the agreed systems of electronic transmission stated in the Appendix

to Tender.

All certificates, notices or written orders to be given to the Contractor by the

Employer or the Employer's Representative, and all notices to be given to the

Employer or to the Employer's Representative by the Contractor, shall either

be delivered by hand against written acknowledgement of receipt, or be sent by

airmail or one of the agreed systems of electronic transmission. The addressesfor the receipt of such communications shall be as stated in the Appendix to

Tender.

Provision of 1.9 The Construction Documents shall be in the custody and care of the Contractor.

Construction Unless otherwise stated in the Employer’s Requirements, the Contractor shall

Documents provide six copies for the use of the Employer's Representative and assistants

(as referred to in Sub-Clause 3.3).

Employer’s Use of 1.10 Copyright in the Construction Documents and other design documents made

Contractor’s by or on behalf of the Contractor shall (as between the parties) remain the

Documents property of the Contractor. The Employer may, at his cost, copy, use and

communicate any such documents (including making and using modifications)

for the purposes of completing, operating, maintaining, altering, adjusting and

repairing the Works. They shall not, without the Contractor's consent, be used,

copied or communicated to a third party by the Employer or the Employer’s

Representative for other purposes.

Contractor’s Use of 1.11 Copyright in the Employer’s Requirements and other documents issued by the

Employer’s Employer or the Employer’s Representative to the Contractor shall (as between

Documents the parties) remain the property of the Employer. The Contractor may, at his

cost, copy, use and communicate any such documents for the purposes of the

Contract. They shall not, without the Employer's consent, be used, copied or

communicated to a third party by the Contractor, except as necessary for the

purposes of the Contract.Confidential Details 1.12 The Contractor shall not be required to disclose, to the Employer or the

Employer’s Representative, the confidential details listed in the Appendix to

Tender.

Compliance with 1.13 The Contractor shall, in all matters arising in the performance of the Contract,

Statutes, comply with, give all notices under, and pay all fees required by, the provisions

Regulations and of any national or state statute, ordinance or other law, or any regulation of any

Laws legally constituted public authority having jurisdiction over the Works. The

Contractor shall obtain all permits, licences or approvals required for any part

of the Works, in reasonable time taking account of the times for delivery of the

Plant and Materials and for completion of the Works. The Employer and the

Contractor shall comply with the laws of each country where activities are

performed.

Joint and Several 1.14 If the Contractor is a joint venture (or consortium) of two or more persons, all

Liability such persons shall be jointly and severally liable to the Employer for the

fulfilment of the terms of the Contract. Such persons shall designate one of

them to act as leader with authority to bind the joint venture (or consortium)

and each of its members. The composition or the constitution of the joint

venture (or consortium) shall not be altered without the prior consent of the

Employer.



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2 The EmployerTHE EMPLOYER

General Obligations 2.1 The Employer shall provide the Site and shall pay the Contractor in accordance

with Clause 13.

Access to and 2.2 The Employer shall grant the Contractor right of access to, and possession of,

Possession of the the Site within the time stated in the Appendix to Tender. Such right and

Site possession may not be exclusive to the Contractor.

If the Contractor suffers delay and/or incurs Cost from failure on the part of theEmployer to grant right of access to or possession of the Site, the Contractor shall

give notice to the Employer’s Representative. After receipt of such notice the

Employer’s Representative shall proceed in accordance with Sub-Clause 3.5 to

agree or determine:

(a) any extension of time to which the Contractor is entitled under Sub-

Clause 8.3, and

(a) the amount of such Cost plus reasonable profit, which shall be added to

the Contract Price,

and shall notify the Contractor accordingly.

Permits, Licences or 2.3 The Employer shall, at the request and cost-of the Contractor, assist him inApprovals applying for permits, licences or approvals, which are required for any part of

the Works, for delivery (including clearance through customs) of Plant,

Materials and Contractor’s Equipment, and for the completion of the Works.

Such requests may also include requests for the Employer's assistance in

applying for any necessary government consent to the export of Contractor's

Equipment when it is removed from the Site.

Employer’s 2.4 The Employer shall be entitled to terminate the Contract, at the Employer’s

Entitlement to convenience, at any time after giving 56 days’ prior notice to the Contractor,

Terminate with a copy to the Employer’s Representative, and returning the performance

security. In the event of such termination, the Contractor:

(a) shall proceed in accordance with Sub-Clause’16.3, and

(b) shall be paid by the Employer in accordance with Sub-Clause 19.6.

After such termination, execution of the Works shall not be recommenced

within a period of six years without the Contractor's consent.

3 The Employer’s RepresentativeTHE EMPLOYER’S REPRESENTATIVE

Employer’s 3.1 The Employer’s Representative shall carry out the duties specified in the

Representative’s Contract. The Employer’s Representative shall have no authority to amend the

Duties and Contract.

Authority

The Employer’s Representative may exercise the authority specified in or

necessarily to be implied from the Contract. If the Employer’s Representative

is required, under the terms of his appointment by the Employer, to obtain the

specific approval of the Employer before exercising such authority, such

requirements shall be as stated in Part II. Any requisite approval shall be

deemed to have been given by the Employer for any such authority exercised

by the Employer’s Representative.



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Except as expressly stated in the Conditions of Contract, the Employer’s

Representative shall have no authority to relieve the Contractor of any of his

duties, obligations or responsibilities under the Contract. Any proposal,

inspection, examination, testing, consent, approval or similar act by the

Employer’s Representative (including absence of disapproval) shall not relieve

the Contractor from any responsibility, including responsibility for his errors,

omissions, discrepancies, and non-compliance with Sub-Clauses 5.3 and 5.4.

The Employer’s Representative shall copy to the Employer all communications

given or received by him in accordance with the Contract.

Requirements for 3.2 The Employer’s Representative shall be a suitably qualified engineer or other

Employer’s appropriate professional, having the experience and capability necessary for

Representative compliance with this Clause, or shall employ such suitably qualified engineers

and other professionals and make them available for the Contract.

Employer’s 3.3 The Employer’s Representative may from time to time delegate any of his

Representative's duties to assistants, and may at any time revoke any such delegation. Any such

Authority to delegation or revocation shall be in writing and shall not take effect until a copy

Delegate has been delivered to the Employer and the Contractor.

Any determination, instruction, inspection, examination, testing, consent,

approval or similar act by any such assistant of the Employer's Representative,in accordance with the delegation, shall have the same effect as though it had

been an act of the Employer’s Representative. However:

(a) any failure to disapprove any Plant, Materials, design or workmanship

shall not prejudice the right of the Employer’s Representative to reject such

Plant, Materials, design or workmanship;

(b) if the Contractor questions any determination or instruction of an assistant

of the Employer’s Representative, the Contractor may refer the matter to

the Employer’s Representative, who shall confirm, reverse or vary such

determination or instruction.

Employer’s 3.4 Unless it is legally or physically impossible, the Contractor shall comply withRepresentative’s instructions given by the Employer's Representative in accordance with the

Instructions Contract.

Employer’s 3.5 When the Employer’s Representative is required to determine value, Cost or

Representative to extension of time, he shall consult with the Contractor in an endeavour to reach

Attempt Agreement agreement. If agreement is not achieved, the Employer’s Representative shall

determine the matter fairly, reasonably and in accordance with the Contract.

4 The ContractorTHE CONTRACTOR

General Obligations 4.1 The Works as completed by the Contractor shall be wholly in accordance with

the Contract and fit for the purposes for which they are intended, as defined in

the Contract. The Works shall include any work which is necessary to satisfy

the Employer’s Requirements, Contractor’s Proposal and Schedules, or is

implied by the Contract, or arises from any obligation of the Contractor, and

all works not mentioned in the Contract but which may be inferred to be

necessary for stability or completion or the safe, reliable and efficient operation

of the works.



8

The Contractor shall design, execute and complete the Works, including

providing Construction Documents, within the Time for Completion, and shall

remedy any defects within the Contract Period. The Contractor shall provide

all superintendence, labour, Plant, Materials, Contractor’s Equipment,

Temporary Works and all other things, whether of a temporary or permanent

nature, required in and for such design, execution, completion and remedying

of defects.

Before commencing design, the Contractor shall satisfy himself regarding the

Employer’s Requirements (including design criteria and calculations, if any)and the items of reference mentioned in Sub-Clause 4.7. The Contractor shall

give notice to the Employer’s Representative of any error, fault or other defect

In the Employer’s Requirements or such items of reference. After receipt of

such notice, the Employer’s Representative shall determine whether Clause 14

shall be applied, and shall notify the Contractor accordingly.

The Contractor shall take full responsibility for the adequacy, stability and

safety of all Site operations, of all methods of construction and of all the Works,

irrespective of any approval or consent by the Employer’s Representative.

Performance 4.2 The Contractor shall obtain, at his cost, a performance security from a third

Security party, in the amount and currencies specified in the Appendix to Tender, and

deliver it to the Employer by the date 28 days after the Effective Date. The

performance security shall be provided by an entity approved by the Employer

and shall be in the form annexed, or in another form approved by the Employer.

The performance security shall be valid until the Contractor has executed and

completed the Works and remedied any defects. It shall be returned to the

Contractor within 14 days of the issue of the Performance Certificate. Prior to

making a claim under the performance security, the Employer shall, in every

case, notify the Contractor stating the nature of the default for which the claim

is to be made.

Contractor’s 4.3 Unless the Contractor’s Representative is named in the Contract, the ContractorRepresentative shall, within 14 days of the Effective Date, submit to the Employer’s

Representative for consent the name and particulars of the person the

Contractor proposes to appoint. The Contractor shall not revoke the

appointment of the Contractor's Representative without the prior consent of the

Employer’s Representative.

The Contractor’s Representative shall give his whole time to directing the

preparation of the Construction Documents and the execution of the Works.

Except as otherwise stated in the Contract, the Contractor’s Representative

shall receive (on behalf of the Contractor) all notices, instructions, consents,

approvals, certificates, determinations and other communications under the

Contract. Whenever the Contractor’s Representative is to be absent from theSite, a suitable replacement person shall be appointed, and the Employer’s

Representative shall be notified accordingly.

The Contractor’s Representative may delegate any of his powers, functions and

authorities to any competent person, and may at any time revoke any such

delegation. Any such delegation or revocation shall be in writing and shall not

take effect until the Employer’ Representative has received prior notice signed

by the Contractor’s Representative, specifying the powers, functions and

authorities being delegated or revoked. The Contractor’s Representative and

such persons shall be fluent in the language for day to day communications

defined in Sub-Clause 1.4.



9

Co-ordination of 4.4 The Contractor shall be responsible for the co-ordination and proper execution

the Works of the 'Works, including co-ordination of other contractors to the extent

specified in the Employer’s Requirements. The Contractor shall, as specified in

the Employer’s Requirements, afford all reasonable opportunities for carrying

out their work to:

(a) any other contractors employed by the Employer and their workmen,

(b) the workmen of the Employer, and

(c) the workmen of any legally constituted public authorities who may be

employed in the execution on or near the Site of any work not included in

the Contract, which the Employer may require.

The Contractor shall obtain, co-ordinate and submit to the Employer’s

Representative for his information all details (including details of work to be

carried out off the Site) from Subcontractors. The Contractor shall be

responsible for the locations of their work or materials, in order to ensure that

there is no conflict with the work of other Subcontractors, the Contractor or

other contractors.

Subcontractors 4.5 The Contractor shall not subcontract the whole of the Works. Unless otherwise

stated in Part II:

(a) the Contractor shall not be required to obtain consent for purchases of

Materials or for subcontracts for which the Subcontractor is named in the

Contract;

(b) the prior consent of the Employer’s Representative shall be obtained to

other proposed Subcontractors;

(c) not less than 28 days before the intended date of each Subcontractor

commencing work on the Site, the Contractor shall notify the Employer’s

Representative of such intention; and

(d) where practicable, the Contractor shall give a fair and reasonable

opportunity for contractors from the Country to be appointed as

Subcontractors.

The Contractor shall be responsible for observance by all Subcontractors of all

the provisions of the Contract. The Contractor shall be responsible for the acts

or defaults of any Subcontractor, his agents or employees, as fully as if they

were the acts or defaults of the Contractor, his agents or employees.

Assignment of 4.6 If a Subcontractor has undertaken a continuing and assignable obligation to the

Subcontractor’s Contractor for the work designed or executed, or Plant, Materials or services

Obligations supplied, by such Subcontractor, and if such obligation extends beyond the

expiry of the Contract Period, the Contractor shall, upon the expiry of the

Contract Period, assign the benefit of such obligation to the Employer for its

unexpired duration, at the request and cost of the Employer.Setting Out 4.7 The Contractor shall set out the Works in relation to original points, lines and

levels of reference specified in the Employer's Requirements or, if not

specified, given by the Employer’s Representative in writing. The Contractor

shall rectify, at his cost, any error in the positions, levels, dimensions or

alignment of the Works.

Quality Assurance 4.8 Unless otherwise stated in Part II, the Contractor shall institute a quality

assurance system to demonstrate compliance with the requirements of the

Contract. Such system shall be in accordance with the details stated in the

Contract. Compliance with the quality assurance system shall not relieve the

Contractor of his duties, obligations or responsibilities.



10

Details of all procedures and compliance documents shall be submitted to the

Employer’s Representative for his information before each design and

execution stage is commenced. When any document is issued to the Employer’s

Representative, it shall be accompanied by the signed quality statements for

such document, in accordance with the details stated in the Contract. The

Employer’s Representative shall be entitled to audit any aspect of the system

and require corrective action to be taken.

Site Data 4.9 The Employer shall have made available to the Contractor, prior to the Base

Date, all the data on hydrological and sub-surface conditions at the Site, andstudies on environmental impact, which have been obtained by or on behalf of

the Employer from investigations for the Works. The Contractor shall be

responsible for interpreting all data.

The Contractor shall be deemed to have inspected and examined the Site, its

surroundings, the above data and other available information, and to have

satisfied himself (so far as is practicable, taking account of cost and time)

before submitting the Tender, as to:

(a) the form and nature of the Site, including the sub-surface conditions,

(b) the hydrological and climatic conditions,

(c) the extent and nature of the work and Materials necessary for the execution

and completion of the Works, and the remedying of any defects, and

(d) the means of access to the Site and the accommodation he may require.

The Contractor shall be deemed to have obtained all necessary information as

to risks, contingencies and all other circumstances which may influence or

affect the Tender.

Matters Affecting 4.10 The Contractor shall be deemed to have satisfied himself as to the correctness

the Execution of the and sufficiency of the Contract Price. Unless otherwise stated in the Contract,

Works the Contract Price shall cover all his obligations under the Contract (including

those under Provisional Sums, if any) and all things necessary for the proper

design, execution and completion of the Works and the remedying of any

defects.

Unforeseeable 4.11 If sub-surface conditions are encountered by the Contractor which in his

Sub-Surface opinion were not foreseeable by an experienced contractor, the Contractor shall

Conditions give notice to the Employer’s Representative so that the Employer's

Representative can inspect such conditions. After receipt of such notice and

after his inspection and investigation, the Employer’s Representative shall, if

such conditions were not (by the Base Date) foreseeable by an experienced

contractor, proceed in accordance with Sub-Clause 3.5 to agree or determine:


Clause 8.3, and

(b) the additional Cost due to such conditions, which shall be added to the

Contract Price,


Access Route 4.12 The Contractor shall be deemed to have satisfied himself as to the suitability

and availability of the access routes he chooses to use. The Contractor shall

(as between the parties) be responsible for the maintenance of access routes. The

Contractor shall provide any signs or directions which he may consider

necessary for the guidance of his staff, labour and others. The Contractor shall

obtain any permission that may be required from the relevant authorities for the

use of such routes, signs and directions.



11

The Employer will not be responsible for any claims which may arise from the

use or otherwise of any access route. The Employer does not guarantee the

suitability or availability of any particular access route, and will not entertain

any claim for any non-suitability or non-availability for continuous use during

construction of any such route.

Rights of Way and 4.13 The Contractor shall bear all costs and charges for special or temporary rights-

Facilities of-way required by him for access to the Site. The Contractor shall also provide,

at his own cost, any additional facilities outside the Site required by him for the

purposes of the Works.

Programme 4.14 The Contractor shall submit a programme to the Employer’s Representative,

for information, within the time stated in the Appendix to Tender. The

programme shall include the following:

(a) the order in which the Contractor proposes to carry out the Works

(including each stage of design, procurement, manufacture, delivery to

Site, construction, erection, testing and commissioning),

(b) all major events and activities in the production of Construction

Documents,

(c) the periods for the pre-construction reviews under Sub-Clause 5.2 and for

any other submissions, approvals and consents specified in the Employer’sRequirements, and

(d) the sequence of all tests specified in the Contract.

Unless otherwise stated in the Contract, the programme shall be developed

using precedence networking techniques, showing early start, late start, early

finish and late finish dates.

The Contractor shall, whenever required by the Employer’s Representative,

provide in writing, for information, a general description of the arrangements

and methods which the Contractor proposes to adopt for the execution of the

Works. No significant alteration to the programme, or to such arrangements and

methods, shall be made without informing the Employer’s Representative. Ifthe progress of the Works does not conform to the programme, the Employer’s

Representative may instruct the Contractor to revise the programme, showing

the modifications necessary to achieve completion within the Time for

Completion.

Progress Reports 4.15 Monthly progress reports shall be prepared by the Contractor and submitted to

the Employer’s Representative in six copies. The first report shall cover the

period up to the end of the calendar month after that in which the

Commencement Date occurred; reports shall be submitted monthly thereafter,

each within 14 days of the last day of the period to which it relates. Reporting

shall continue until the Contractor has completed all work which is known to

be outstanding at the completion date stated in the Taking-Over Certificate forthe Works. Each report shall include:

(a) photographs and detailed descriptions of progress, including each stage

of design, procurement, manufacture, delivery to Site, construction, erection,

testing and commissioning;

(b) charts showing the status of Construction Documents, purchase orders,

manufacture and construction;

(c) for the manufacture of each main item of Plant and Materials, the name of

manufacturer, manufacture location, percentage progress, and the actual or

expected dates of commencement of manufacture, Contractor's

inspections, tests and delivery;



12

(d) records of personnel and Contractor’s Equipment on Site;

(e) Copies of quality assurance documents, test results and certificates of

Materials;

(f) safety statistics, including details of any hazardous incidents and activities

relating to environmental aspects and public relations; and

(g) comparisons of actual and planned progress, with details of any aspects

which may jeopardize the completion in accordance with the Contract, and

the measures being (or to be) adopted to overcome such aspects.

Contractor’s 4.16 Unless otherwise stated in Part II, the Contractor shall provide all Contractor’s

Equipment Equipment necessary to complete the Works. All Contractor’s Equipment shall,

when brought on to the Site, be deemed to be exclusively intended for the

execution of the Works. The Contractor shall not remove from the Site any such

Contractor's Equipment without the consent of the Employer’s Representative.

Safety Precautions 4.17 The Contractor shall comply with all applicable safety regulations in his design,

access arrangements and operations on Site. Unless otherwise stated in Part II,

the Contractor shall, from the commencement of work on Site until taking-over

by the Employer, provide:

(a) fencing, lighting, guarding and watching of the Works, and

(b) temporary roadways, footways, guards and fences which may be necessary

for the accommodation and protection of owners and occupiers of adjacent

land, the public and others.

Protection of the 4.18 The Contractor shall take all reasonable steps to protect the environment (both

Environment on and off the Site) and to limit damage and nuisance to people and property

resulting from pollution, noise and other results of his operations. The

Contractor shall ensure that air emissions, surface discharges and effluent from

the Site during the Contract Period shall not exceed the values indicated in the

Employer’s Requirements, and shall not exceed the values prescribed by law.

Electricity, Water 4.19 The Contractor shall be entitled to use for the purposes of the Works such

and Gas supplies of electricity, water, gas and other services as may be available on the

Site and of which details are given in the Employer’s Requirements. The

Contractor shall pay the Employer at the prices stated in the Employer’s

Requirements. The quantities consumed shall be determined by the Employer's

Representative, who shall include the amounts due as deductions in Interim and

Final Payment Certificates. The Contractor shall, at his risk and cost, provide

any apparatus necessary for such determination and for his use of these

services.

Employer Supplied 4.20 The Employer undertakes to provide the items of machinery and materials (if

Machinery and any) in accordance with the details given in the Employer’s Requirements. The

Materials Employer shall, at his risk and cost, transport such machinery and materials tothe Contractor, at the time and place specified in the Contract.

The Contractor shall visually inspect the machinery and materials upon receipt

at such place, and shall notify the Employer and the Employer’s Representative

of any shortage, defect or default; then, either the Employer shall immediately

rectify any shortage, defect or default, or the Contractor (if the Contractor and

the Employer’s Representative so agree) shall carry out such rectification as a

Variation. After visual inspection, this machinery and materials shall come

under the care, custody and control of the Contractor. The Contractor’s

obligations of inspection, care, custody and control shall not relieve the

Employer of liability for any undetectable shortage, defect or default.



13

The Employer also undertakes to operate the items of machinery and equipment

in accordance with the details, arrangements and charges given in the

Employer's Requirements. The Contractor shall pay such charges to the

Employer; the amounts due shall be determined by the Employer’s

Representative and included as deductions in Interim and Final Payment

Certificates.

Clearance of Site 4.21 During the execution of the Works, the Contractor shall keep the Site free from

all unnecessary obstruction, and shall store or dispose of any Contractor’s

Equipment or surplus materials. The Contractor shall clear away and removefrom the Site any wreckage, rubbish or Temporary Works no longer required.

Upon the issue of any Taking-Over Certificate, the Contractor shall clear away

and remove, from that part of the Site and Works to which such Taking-Over

Certificate refers, all Contractor's Equipment, surplus material, wreckage,

rubbish and Temporary Works. The Contractor shall leave such part of the Site

and the Works in a clean and safe condition to the satisfaction of the Employer’s

Representative. Except that, the Contractor shall be entitled to retain on Site,

until the expiry of the Contract Period, such Contractor's Equipment, Materials

and Temporary Works as required by him for the purpose of fulfilling his

obligations under the Contract.

If the Contractor fails to remove, by 28 days after the issue of the Performance

Certificate, any remaining Contractor’s Equipment, surplus material, wreckage,

rubbish and Temporary Works, the Employer may sell or otherwise dispose of

such items. The Employer shall be entitled to retain, from the proceeds of such

sale, a sum sufficient to meet the costs incurred in connection with the sale or

disposal, and in restoring the Site. Any balance of the proceeds shall be paid to

the Contractor. If the proceeds of the sale are insufficient to meet the

Employer's costs, the outstanding balance shall be recoverable from the

Contractor by the Employer.

Security of the Site 4.22 Unless otherwise stated in Part II:

(a) the Contractor shall be responsible for keeping unauthorised persons offthe Site, and

(b) authorised persons shall be limited to the employees of the Contractor,

employees of his Subcontractors and persons authorised by the Employer

or the Employer’s Representative.

Contractor’s 4.23 The Contractor shall confine his operations to the Site, and to any additional

Operations on Site areas which may be provided by the Contractor and agreed by the Employer’s

Representative as working areas. The Contractor shall take all necessary

precautions to keep his personnel and equipment within the Site and such

additional areas, and to keep and prohibit them from encroaching on adjacent

land.Fossils 4.24 All fossils, coins, articles of value or antiquity, and structures and other remains

or things of geological or archaeological interest discovered on the Site shall

(as between the parties) be the property of the Employer. The Contractor shall

take reasonable precautions to prevent his staff, labour or other persons from

removing or damaging any such article or thing. The Contractor shall,

immediately upon discovery of such article or thing, advise the Employer’s

Representative, who may issue instructions for dealing with it.



14

If the Contractor suffers delay and/or incurs Cost in following these instructions

of the Employer’s Representative, and if such delay and/or Cost was not (by

the Base Date) foreseeable by an experienced contractor, the Contractor shall

give notice to the Employer’s Representative, with a copy to the Employer.

After receipt of such notice, the Employer’s Representative shall proceed in

accordance with Sub-Clause 3.5 to agree or determine:


Clause 8.3, and

(b) the amount of such Cost, which shall be added to the Contract Price,


5 DesignDESIGN

General Obligations 5.1 The Contractor shall carry out, and be responsible for, the design of the Works.

Design shall be prepared by qualified designers who are engineers or other

professionals who comply with the criteria (if any) stated in the Employer’s

Requirements. For each part of the Works, the prior consent of the Employer’s

Representative shall be obtained to the designer and design Subcontractor, if

they are not named as such in the Contract. Nothing contained in the Contractshall create any contractual relationship or professional obligations between

any designer, or a design Subcontractor, and the Employer.

The Contractor holds himself, his designers and design Subcontractors as having

the experience and capability necessary for the design. The Contractor undertakes

that the designers shall be, available to attend discussions with the Employer’s

Representative at all reasonable times during the Contract Period.

Construction 5.2 The Contractor shall prepare Construction Documents in sufficient detail to

Documents satisfy all regulatory approvals, to provide suppliers and construction personnel

sufficient instruction to execute the Works, and to describe the operation of the

completed Works. The Employer’s Representative shall have the right to review

and inspect the preparation of Construction Documents, wherever they are

being prepared.

Each of the Construction Documents shall, when considered ready for use, be

submitted to the Employer’s Representative for pre-construction review. In this

Sub-Clause, “review period” means the period required by the Employer’s

Representative, which (unless otherwise stated in the Employer’s

Requirements) shall not exceed 21 days, calculated from the date on which the

Employer’s Representative receives a Construction Document and the

Contractor's notice that it is considered ready, both for a pre-construction

review in accordance with this Sub-Clause, and for use. If the Employer’s

Representative, within such review period, notifies the Contractor that suchConstruction Document fails (to the extent stated) to comply with the

Employer’s Requirements, it shall be rectified, resubmitted and reviewed in

accordance with this Sub-Clause, at the Contractor’s cost.

For each part of the Works, and except to the extent that the prior consent of

the Employer’s Representative shall have been obtained:

(a) construction shall not commence prior to the expiry of the review periods

for the Construction Documents which are relevant to the design and

construction of such part;



15

(b) construction shall be in accordance with such Construction Documents;

and

(c) if the Contractor wishes to modify any design or document which has

previously been submitted for such pre-construction review, the Contractor

shall immediately notify the Employer's Representative, and shall

subsequently submit revised documents to the Employer's Representative

for pre-construction review.

If the Employer’s Representative instructs that further Construction Documents

are necessary for carrying out the Works, the Contractor shall upon receiving the

Employer's Representative's instructions prepare such Construction Documents.

Errors, omissions, ambiguities, inconsistencies, inadequacies and other defects

shall be rectified by the Contractor at his cost.

Contractor’s 5.3 The Contractor undertakes that, if legally and physically possible, the design,

Undertaking the Construction Documents, the execution and the completed Works will be

in accordance with the following, in order of priority:

(a) the law in the Country, and

(b) the documents forming the Contract, as altered or modified by Variations.

Technical Standards 5.4 The design, the Construction Documents, the execution and the completedand Regulations Works shall comply with the Country’s national specifications, technical

standards, building, construction and environmental regulations, regulations

applicable to the product being produced from the Works, and the standards

specified in the Employer’s Requirements, applicable to the Contractor's

Proposal and Schedules, or defined by law. References in the Contract to such

specifications and other matters shall be understood to be references to the

edition applicable on the Base Date, unless stated otherwise. If substantially

changed or new applicable national specifications, technical standards or

regulations come into force after the Base Date, the Contractor shall submit

proposals for compliance to the Employer’s Representative. In the event that

the Employer’s Representative determines that such proposals constitute avariation, he shall then initiate a Variation in accordance with Clause 14.

Samples 5.5 The Contractor shall submit the following samples and relevant information to

the Employer’s Representative for pre-construction review in accordance with

the procedure for Construction Documents described in Sub-Clause 5.2:

(a) manufacturer’s standard samples of Materials,

(b) samples (if any) specified in the Employer’s Requirements, and

(c) additional samples instructed by the Employer’s Representative under

Clause 14.

Each sample shall be labelled as to origin and intended use in the Works.

As-Built Drawings 5.6 The Contractor shall prepare, and keep up-to-date, a complete set of “as-built”

records of the execution of the Works, showing the exact “as-built” locations,

sizes and details of the work as executed, with cross references to relevant

specifications and data sheets. These records shall be kept on the Site and shall

be used exclusively for the purposes of this Sub-Clause. Two copies shall be

submitted to the Employer's Representative prior to the commencement of the

Tests on Completion.



16

In addition, the Contractor shall prepare and submit to the Employer’s

Representative “as-built drawings” of the Works, showing all Works as

executed. The drawings shall be prepared as the Works proceed, and shall be

submitted to the Employer’s Representative for his inspection. The Contractor

shall obtain the consent of the Employer's Representative as to their size, the

referencing system, and other pertinent details.

Prior to the issue of any Taking-Over Certificate, the Contractor shall submit

to the Employer’s Representative one microfiche copy, one full-size original

copy and six printed copies of the relevant “as-built drawings”, and any furtherConstruction Documents specified in the Employer’s Requirements. The Works

shall not be considered to be completed for the purposes of taking-over under

Sub-Clause 10. 1 until such documents have been submitted to the Employer’s

Representative.

Operation and 5.7 Prior to commencement of the Tests on Completion, the Contractor shall

Maintenance prepare, and submit to the Employer’s Representative, operation and

Manuals maintenance manuals in accordance with the Employer’s Requirements and in

sufficient detail for the Employer to operate, maintain, dismantle, reassemble,

adjust and repair the Works. The Works shall not be considered to be completed

for the purposes of taking-over under Sub-Clause 10. 1 until such operation and

maintenance manuals have been submitted to the Employer’s Representative.

Error by Contractor 5.8 If errors are found in the Construction Documents, they and the Works shall be

corrected at the Contractor’s cost.

Patent Rights 5.9 The Contractor shall indemnify the Employer against all claims of infringement

of any patent, registered design, copyright, trade mark or trade name, or other

intellectual property right, if:

(a) the claim or proceedings arise out of the design, construction, manufacture

or use of the Works;

(b) the infringement (or allegation of infringement) was not the result of part

(or all) of the Works being used for a purpose other than that indicated by,

or reasonably to be inferred from, the Contract;

(c) the infringement (or allegation of infringement) was not the result of part

(or all) of the Works being used in association or combination with any

thing not supplied by the Contractor, unless such association or

combination was disclosed to the Contractor prior to the Base Date or is

stated in the Contract; and

(d) infringement (or allegation of infringement) was not the unavoidable

result of the Contractor’s compliance with the Employer’s Requirements.

The Contractor shall be promptly notified of any claim under this Sub-

Clause made against the Employer. The Contractor may, at his cost, conduct

negotiations for the settlement of such claim, and any litigation or arbitration

that may arise from it. The Employer or the Employer’s Representative shall

not make any admission which might be prejudicial to the Contractor, unless

the Contractor has failed to take over the conduct of the negotiations, litigation

or arbitration within a reasonable time after having been so requested.

Except to the extent that the Employer agrees otherwise, the Contractor shall

not make any admission which might be prejudicial to the Employer, until the

Contractor has given the Employer such reasonable security as the Employer

may require. The security shall be for an amount which is an assessment of the

compensation, damages, charges and costs for which the Employer may

become liable, and to which the indemnity under this Sub-Clause applies.



17

The Employer shall, at the request and cost of the Contractor, assist him

in contesting any such claim or action, and shall be repaid all reasonable costs

incurred.

6 Staff and LabourSTAFF AND LABOUR

Engagement of Staff 6.1 The Contractor shall make his own arrangements for the engagement of all staff

and Labour and labour, local or otherwise, and for their payment, housing, feeding andtransport.

Rates of Wages and 6.2 The Contractor shall pay rates of wages, and observe conditions of labour, not

Conditions of less favourable than those established for the trade or industry where the work

Labour is carried out. If no such established rates or conditions are applicable, the

Contractor shall pay rates of wages and observe conditions not less favourable

than the general level of wages and conditions observed by employers whose

trade or industry is similar to that of the Contractor.

Persons in the 6.3 The Contractor shall not recruit, or attempt to recruit, his staff and labour from

Service of Others amongst persons in the service of the Employer or the Employer’s

Representative.

Labour Laws 6.4 The Contractor shall comply with all the relevant labour laws applying to his

employees, and shall duly pay and afford to them all their legal rights. The

Contractor shall require all such employees to obey all applicable laws and

regulations concerning safety at work.

Working Hours 6.5 No work shall be carried out on the Site outside the normal working hours

stated in the Appendix to Tender, or on the locally recognised days of rest,

unless:

(a) the Contract so provides,

(b) the work is unavoidable, or necessary for the saving of life or property or

for the safety of the Works, in which case the Contractor shall immediatelyadvise the Employer’s Representative, or

(c) the Employer’s Representative gives his consent.

Facilities for Staff 6.6 Unless otherwise stated in Part II, the Contractor shall provide and maintain all

and Labour necessary accommodation and welfare facilities for his (and his Sub-

contractor’s) staff and labour. The Contractor shall also provide the facilities

specified in the Employer’s Requirements, for the Employer’s and Employer’s

Representative’s personnel. The Contractor shall not permit any of his

employees to maintain any temporary or permanent living quarters within the

structures forming part of the Works.

Health and Safety 6.7 Precautions shall be taken by the Contractor to ensure the health and safety ofhis staff and labour. The Contractor shall, in collaboration with and to the

requirements of the local health authorities, ensure that medical staff, first aid

facilities, sick bay and ambulance service are available at the accommodation

and on the Site at all times, and that suitable arrangements are made for all

necessary welfare and hygiene requirements and for the prevention of

epidemics. The Contractor shall maintain records and make reports concerning

health, safety and welfare of persons, and damage to property, as the

Employer’s Representative may reasonably require.



18

The Contractor shall appoint a member of his staff at the Site to be responsible

for maintaining the safety, and protection against accidents, of personnel on the

Site. This person shall be qualified for his work and shall have the authority to

issue instructions and take protective measures to prevent accidents. The

Contractor shall send, to the Employer’s Representative, details of any accident

as soon as possible after its occurrence.

Contractor’s 6.8 The Contractor shall provide all necessary superintendence during the design

Superintendence and execution of the Works, and as long thereafter as the Employer’s

Representative may consider necessary for the proper fulfilling of theContractor’s obligations under the Contract. Such superintendence shall be

given by sufficient persons having adequate knowledge of the operations to be

carried out (including the methods and techniques required, the hazards likely

to be encountered and methods of preventing accidents) for the satisfactory and

safe execution of the Works.

Contractor’s 6.9 The Contractor shall employ (or cause to be employed) only persons who are

Personnel careful and appropriately qualified, skilled and experienced in their respective

trades or occupations. The Employer’s Representative may require the

Contractor to remove (or cause to be removed) any person employed on the

Site or Works, including the Contractor's Representative, who in the opinion

of the Employer’s Representative:

(a) persists in any misconduct,

(b) is incompetent or negligent in the performance of his duties,

(c) fails to conform with any provisions of the Contract, or

(d) persists in any conduct which is prejudicial to safety, health, or the

protection of the environment.

If appropriate, the Contractor shall then appoint (or cause to be appointed) a

suitable replacement person.

Disorderly Conduct 6.10 The Contractor shall at all times take all reasonable precautions to prevent any

unlawful, riotous or disorderly conduct by or amongst his staff and labour, andto preserve peace and protection of persons and property in the neighbourhood

of the Works against such conduct.

7 Plant, Materials and WorkmanshipPLANT, MATERIALS AND WORKMANSHIP

Manner of 7.1 All Plant and Materials to be supplied shall be manufactured, and all work to

Execution be done shall be executed, in the manner set out in the Contract. Where the

manner of manufacture and execution is not set out in the Contract, the work

shall be executed in a proper, workmanlike and careful manner, with properly

equipped facilities and non-hazardous Materials, and in accordance with

recognized good practice.

Delivery to Site 7.2 The Contractor shall be responsible for procurement, transport, receiving,

unloading and safe keeping of all Plant, Materials, Contractor's Equipment and

other things required for the completion of the Works.



19

Inspection 7.3 The Employer and the Employer’s Representative shall be entitled, during

manufacture, fabrication and preparation at any places where work is being

carried out, to inspect, examine and test the materials and workmanship, and to

check the progress of manufacture, of all Plant and Materials to be supplied

under the Contract. The Contractor shall give them full opportunity to inspect,

examine, measure and test any work on Site or wherever carried out.

The Contractor shall give due notice to the Employer’s Representative

whenever such work is ready, before packaging, covering up or putting out of

view. The Employer’s Representative shall then either carry out the inspection,examination, measurement or testing without unreasonable delay, or notify the

Contractor that it is considered unnecessary. If the Contractor fails to give such

notice, he shall, when required by the Employer’s Representative, uncover such

work and thereafter reinstate and make good at his own cost.

Testing 7.4 If the Contract provides for tests, other than the Tests after Completion, the

Contractor shall provide all documents and other information necessary for

testing and such assistance, labour, materials, electricity, fuel, stores, apparatus

and instruments as are necessary to carry out such tests efficiently.

The Contractor shall agree, with the Employer’s Representative, the time and

place for the testing of any Plant and other parts of the Works as specified in

the Contract. The Employer’s Representative shall give the Contractor not less

than 24 hours’ notice of his intention to attend the tests. The Contractor shall

provide sufficient suitably qualified and experienced staff to carry out the tests

specified in the Contract.

If the Employer’s Representative does not attend at the time and place agreed,

or if the Contractor and the Employer’s Representative agree that the

Employer’s Representative shall not attend, the Contractor may proceed with

the tests, unless the Employer's Representative instructs the Contractor

otherwise. Such tests shall be deemed to have been made in the Employer’s

Representative’s presence.

The Contractor shall promptly forward to the Employer’s Representative dulycertified reports of the tests. If the Employer’s Representative has not attended

the tests, he shall accept the readings as accurate. When the specified tests have

been passed, the Employer’s Representative shall endorse the Contractor's test

certificate, or issue a certificate to him, to that effect.

Rejection 7.5 If, as a result of inspection, examination or testing, the Employer’s

Representative decides that any Plant, Materials, design or workmanship is

defective or otherwise not in accordance with the Contract, the Employer’s

Representative may reject such Plant, Materials, design or workmanship and

shall notify the Contractor promptly, stating his reasons. The Contractor shall

then promptly make good the defect and ensure that the rejected item complies

with the Contract.

If the Employer’s Representative requires such Plant, Materials, design or

workmanship to be retested, the tests shall be repeated under the same terms

and conditions. If such rejection and retesting cause the Employer to incur

additional costs, such costs shall be recoverable from the Contractor by the

Employer, and may be deducted by the Employer from any monies due, or to

become due, to the Contractor.

Ownership of Plant 7.6 Each item of Plant and Materials shall become the property of the Employer at

and Materials whichever is the earlier of the following times:



20

(a) when it is delivered to Site;

(b) when by virtue of Sub-Clause 8.9, the Contractor becomes entitled

to payment of the value of the Plant and Materials.

8 Commencement, Delays and Suspension

COMMENCEMENT, DELAY AND SUSPENSIONCommencement of 8.1 The Contractor shall commence the design and execution of the Works as soon

Works as is reasonably possible after the receipt of a notice to this effect from the

Employer’s Representative. Such notice shall be issued within the time stated

in the Appendix to Tender after the Effective Date. The Contractor shall then

proceed with the Works with due expedition and without delay, until

completion.

Time for 8.2 The whole of the Works, and each Section (if any), shall be completed and shall

Completion have passed the Tests on Completion within the Time for Completion for the

Works or such Section (as the case may be).

Extension of Time 8.3 The Contractor may apply for an extension of the Time for Completion if he is

for Completion or will be delayed either before or after the Time for Completion by any of the

following causes:

(a) a Variation (unless an adjustment to the Time for Completion is agreed

under Sub-Clause 14.3),

(b) a force majeure event (as defined in Sub-Clause 19.1),

(c) a cause of delay giving an entitlement to extension of time under a Sub-

Clause of these Conditions, unless the Contractor has not complied with

such Sub-Clause,

(d) physical conditions or circumstances on the Site, which are exceptionally

adverse and were not (by the Base Date) foreseeable by an experienced

contractor, or

(e) any delay, impediment or prevention by the Employer.If the Contractor intends to apply for an extension of the Time for Completion,

the Contractor shall give notice to the Employer’s Representative of such

intention as soon as possible and in any event within 28 days of the start of the

event giving rise to the delay, together with any other notice required by the

Contract and relevant to such cause. The Contractor shall keep such

contemporary records as may be necessary to substantiate any application,

either on the Site or at another location acceptable to the Employer’s

Representative, and such other records as may reasonably be requested by the

Employer’s Representative. The Contractor shall permit the Employer’s

Representative to inspect all such records, and shall provide the Employer’s

Representative with copies as required.Within 28 days of the first day of such delay (or such other period as may be

agreed by the Employer’s Representative), the Contractor shall submit full

supporting details of his application. Except that, if the Contractor cannot

submit all relevant details within such period because the cause of delay

continued for a period exceeding 7 days, the Contractor shall submit interim

details at intervals of not more than 28 days (from the first day of such delay)

and full and final supporting details of his application within 21 days of the last

day of delay.



21

The Employer’s Representative shall proceed in accordance with Sub-

Clause 3.5 to agree or determine either prospectively or retrospectively such

extension of the Time for Completion as may be due. The Employer’s

Representative shall notify the Contractor accordingly. When determining each

extension of time, the Employer’s Representative shall review his previous

determinations and may revise, but shall not decrease, the total extension of

time.

Delays Caused by 8.4 If the following conditions apply, namely:

Authorities (a) the Contractor has diligently followed the procedures laid down by therelevant legally constituted public authorities in the Country,

(b) such authorities delay, impede or prevent the Contractor, and

(c) the resulting delay to the Works was not (by the Base Date) foreseeable by

an experienced contractor,

then such delay will be considered as a cause of delay giving an entitlement to

extension of time under Sub-Clause 8.3.

Rate of Progress 8.5 If, at any time, the Contractor’s actual progress falls behind the programme

referred to in Sub-Clause 4.14, or it becomes apparent that it will so fall behind,

the Contractor shall submit to the Employer’s Representative a revised

programme taking into account the prevailing circumstances. The Contractor

shall, at the same time, notify the Employer’s Representative of the steps being

taken to expedite progress, so as to achieve completion within the Time for

Completion.

If any steps taken by the Contractor in meeting his obligations under this Sub-

Clause cause the Employer to incur additional costs, such costs shall be

recoverable from the Contractor by the Employer, and may be deducted by the

Employer from any monies due, or to become due, to the Contractor.

Liquidated Damages 8.6 If the Contractor fails to comply with Sub-Clause 8.2, the Contractor shall pay

for Delay to the Employer the relevant sum stated in the Appendix to Tender as liquidated

damages for such default (which sum shall be the only monies due from theContractor for such default) for every day or pun of a day which shall elapse

between the relevant Time for Completion and the date stated in the Taking-

Over Certificate; except that the total payment shall not exceed the limit of

liquidated damages (if any) stated in the Appendix to Tender.

The Employer may, without prejudice to any other method of recovery, deduct

the amount of such damages from any monies due, or to become due, to the

Contractor. In the event of an extension of time being granted under Sub-

Clause 8.3, the amount due under this Sub-Clause shall be recalculated

accordingly, and any over-payment refunded. The payment or deduction of such

damages shall not relieve the Contractor from his obligation to complete the

Works, or from any other of his duties, obligations or responsibilities under theContract.

At any time after the Employer has become entitled to liquidated damages, the

Employer’s Representative may give notice to the Contractor under Sub-

Clause 15.1, requiring the Contractor to complete within a specified reasonable

time for completion. Such action shall not prejudice the Employer’s

entitlements to payment under this Sub-Clause and to terminate under Sub-

Clause 15.2.

Suspension of Work 8.7 The Employer’s Representative may at any time instruct the Contractor to

suspend progress of part or all of the Works. During suspension, the Contractor



22

shall protect, store and secure such part or the Works against any deterioration,

loss or damage.

Consequences of 8.8 If the Contractor suffers delay and/or incurs Cost in following the Employer’s

Suspension Representative's instructions under Sub-Clause 8.7, and in resumption of the

work, and if such delay and/or Cost was not (by the Base Date) foreseeable by

an experienced contractor, the Contractor shall give notice to the Employer’s

Representative, with a copy to the Employer. After receipt of such notice the

Employer’s Representative shall proceed in accordance with Sub-Clause 3.5 to

agree or determine:(a) any extension of time to which the Contractor is entitled under Sub-

Clause 8.3, and


and shall notify the Contractor accordingly. Except that the Contractor shall not

be entitled to such extension and payment of Cost if the suspension is due to a

cause attributable to the Contractor, or is necessitated by a Contractor's risk as

defined in Sub-Clause 17.5.

The Contractor shall not be entitled to extension of time for, or payment of the

costs incurred in, making good any deterioration, defect or loss caused by faulty

design, workmanship or materials, or by the Contractor’s failure to take themeasures specified in Sub-Clause 8.7.

Payment for Plant 8.9 The Contractor shall be entitled to payment for Plant and/or Materials which

and Materials in have not been delivered to Site, if the work on Plant or delivery of Plant and/or

Event of Suspension Materials has been suspended for more than 28 days. This entitlement shall be

to payment of the value of such Plant and/or Materials as at the date of

suspension, if:

(a) the Contractor has marked the Plant and/or Materials as the Employer’s

property in accordance with the Employer's Representative’s instructions,

and

(b) the suspension is not due to a cause attributable to the Contractor.

The Employer shall then, if requested by the Contractor, take over the

responsibility for protection, storage, security and insurance of such suspended

Plant and/or Materials; the risk of loss or damage to the suspended works shall

then pass to the Employer.

Prolonged Suspension 8.10 If suspension under Sub-Clause 8.7 has continued for more than 84 days, and

the suspension is not due to a cause attributable to the Contractor, the

Contractor may by notice to the Employer’s Representative require permission

to proceed within 28 days. If permission is not granted within that time, the

Contractor may treat the suspension as an omission under Clause 14 of the

affected part of the Works. If such suspension affects the whole of the Works,the Contractor may terminate his employment, under Sub-Clause 16.2.

Resumption of Work 8.11 After receipt of permission or of an instruction to proceed, the Contractor shall,

after notice to the Employer’s Representative, and together with the Employer’s

Representative, examine the Works and the Plant and Materials affected by the

suspension. The Contractor shall make good any deterioration or defect in or

loss of the Works or Plant or Materials, which has occurred during the

suspension.

If the Employer has taken over risk and responsibility for the suspended Works

under Sub-Clause 8.9, risk and responsibility shall revert to the Contractor 14

days after receipt of the permission or instruction to proceed.



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9 Tests on Completion

TEST ON COMPLETIONContractor’s 9.1 The Contractor shall carry out the Tests on Completion in accordance with this

Obligations Clause and Sub-Clause 7.4, after providing the documents in accordance with

Sub-Clauses 5.6 and 5.7. The Contractor shall give, to the Employer’s

Representative, 21 days' notice of the date after which the Contractor will be

ready to carry out the Tests on Completion. Unless otherwise agreed, such Tests

shall be carried out within 14 days after this date, on such day or days as the

Employer’s Representative shall instruct.

In considering the results of the Tests on Completion, the Employer’s

Representative shall make allowances for the effect of any use of the Works by

the Employer on the performance or other characteristics of the Works. As soon

as the Works, or a Section, have passed the Tests on Completion, the Contractor

shall provide the Employer’s Representative and the Employer with a certified

report of the results of all such Tests.

Delayed Tests 9.2 If the Tests on Completion are being unduly delayed by the Contractor, the

Employer’s Representative may by notice require the Contractor to carry out

such Tests within 21 days after the receipt of such notice. The Contractor shall

carry out such Tests on such day or days within that period as the Contractormay fix and of which he shall give notice to the Employer’s Representative.

If the Contractor fails to carry out the Tests on Completion within 21 days, the

Employer’s Representative may himself proceed with such Tests. All such Tests

so carried out by the Employer’s Representative shall be at the risk and cost of

the Contractor. These Tests on Completion shall then be deemed to have been

carried out in the presence of the Contractor and the results of such Tests shall

be accepted as accurate.

Retesting 9.3 If the Works, or a Section, fail to pass the Tests on Completion, Sub-Clause 7.5

shall apply, and the Employer’s Representative or the Contractor may require

such failed Tests, and the Tests on Completion on any related work, to be

repeated under the same terms and conditions.

Failure to Pass 9.4 If the Works, or a Section, fail to pass the Tests on Completion repeated under

Tests on Completion Sub-Clause 9.3, the Employer’s Representative shall be entitled to:

(a) order further repetition of Tests on Completion under Sub-Clause 9.3;

(b) reject the Works or Section (as the case may be), in which event the

Employer shall have the same remedies against the Contractor as are provided

under Clause 15; or

(d) issue a Taking-Over Certificate, if the Employer so requires: the Contract

Price shall then be reduced by such amount as may be agreed by the

Employer and the Contractor (in full satisfaction of such failure only), and theContractor shall then proceed in accordance with his other obligations under

the Contract.

10 Employer’s Taking Over

EMPLOYER’S TAKING OVERTaking-Over 10.1 Except as stated in Sub-Clause 9.4, the Works shall be taken over by the

Certificate Employer when they have been completed in accordance with the Contract

(except as described in sub-paragraph (a) below), have passed the Tests on



24

Completion and a Taking-Over Certificate for the Works has been issued, or

has deemed to have been issued in accordance with this Sub-Clause. If the

Works are divided into Sections, the Contractor shall be entitled to apply for a

Taking-Over Certificate for each Section.

The Contractor may apply by notice to the Employer’s Representative for a

Taking-Over Certificate not earlier than 14 days before the Works or Section

(as the case may be) will, in the Contractor's opinion, be complete and ready

for taking over. The Employer’s Representative shall, within 28 days after the

receipt of the Contractor’s application:(a) issue the Taking-Over Certificate to the Contractor, stating the date on

which the Works or Section were completed in accordance with the

Contract (except for minor outstanding work that does not affect the use

of the Works or Section for their intended purpose) including passing the

Tests on Completion; or

(b) reject the application, giving his reasons and specifying the work required

to be done by the Contractor to enable the Taking-Over Certificate to be

issued: the Contractor shall then complete such work before issuing a

further notice under this Sub-Clause.

If the Employer’s Representative fails either to issue the Taking-OverCertificate or to reject the Contractor’s application within the period of 28 days,

and if the Works or Section (as the case may be) are substantially in accordance

with the Contract, the Taking-Over Certificate shall be deemed to have been

issued on the last day of that period.

Use by The Employer 10.2 The Employer shall not use any part of the Works unless the Employer’s

Representative has issued a Taking-Over Certificate for such part. If a Taking-

Over Certificate has been issued for any part of the Works (other than a

Section), the liquidated damages for delay in completion of the remainder of

the Works (and of the Section of which it forms part) shall, for any period of

delay after the date stated in such Taking-Over Certificate, be reduced in the

proportion which the value of the part so certified bears to the value of theWorks or Section (as the case may be); such values shall be determined by the

Employer’s Representative in accordance with the provisions of Sub-

Clause 3.5. The provisions of this paragraph shall only apply to the rate of

liquidated damages under Sub-Clause 8.6, and shall not affect the limit of such

damages.

If the Employer does use any part of the Works before the Taking-Over

Certificate is issued:

(a) the part which is used shall be deemed to have been taken over at the date

on which it is used,

(b) the Employer’s Representative shall, when requested by the Contractor,issue a Taking-Over Certificate accordingly, and

(c) the Contractor shall cease to be liable for the care of such part from such

date, when responsibility shall pass to the Employer.

After the Employer’s Representative has issued a Taking-Over Certificate for

a part of the Works, the Contractor shall be given the earliest opportunity to

take such steps as may be necessary to carry out any outstanding Tests on

Completion, and the Contractor shall carry out such Tests on Completion as

soon as practicable, before the expiry of the Contract Period.

Interference with 10.3 If the Contractor is prevented from carrying out the Tests on Completion by a

Tests on Completion cause for which the Employer (or another contractor employed by the



25

Employer) is responsible, the Employer shall be deemed to have taken over the

Works or Section (as the case may be) on the date when the Tests on Completion

would otherwise have been completed. The Employer’s Representative shall

then issue a Taking-Over Certificate accordingly, and the Contractor shall

carry out the Tests on Completion as soon as practicable, before the expiry of the

Contract Period. The Employer's Representative shall require the Tests on

Completion to be carried out by 14 days’ notice and in accordance with the

relevant provisions of the Contract. If the Contractor incurs additional Cost as

a result of this delay in carrying out the Tests on Completion, such Cost plus

reasonable profit shall be determined by the Employer’s Representative in

accordance with the provisions of Sub-Clause 3.5 and shall be added to the

Contract Price.

11 Tests after Completion

TEST AFTER COMPLETIONEmployer’s 11.1 If Tests after Completion are specified in the Contract, this Clause shall apply.

Obligations Unless otherwise stated in Part II, the Employer shall provide the necessary

labour, materials, electricity, fuel and water, and shall carry out the Tests after

Completion in accordance with the manuals provided by the Contractor under

Sub-Clause 5.7 and such guidance as the Contractor may be required to giveduring the course of such Tests.

The Tests after Completion shall be carried out as soon as is reasonably

practicable after the Works, or Section, have been taken over by the Employer.

The Employer shall give to the Contractor 21 days’ notice of the date after

which the Tests after Completion will be carried out. Unless otherwise agreed,

such Tests shall be carried out within 14 days after this date, on the day or days

determined by the Employer. If the Contractor does not attend at the time and

place agreed, the Employer may proceed with the Tests after Completion, which

shall be deemed to have been made in the Contractor's presence, and the

Contractor shall accept the readings as accurate.

The results of the Tests after Completion shall be compiled and evaluated by

the Employer and the Contractor. Any effect on the results of the Tests after

Completion which can reasonably be shown to be due to the prior use of the

Works by the Employer shall be taken into account in assessing such results.

Delayed Tests 11.2 If the Contractor incurs additional Cost as a result of any unreasonable delay

by the Employer in carrying out the Tests after Completion, such Cost plus

reasonable profit shall be determined by the Employer’s Representative in

accordance with the provisions of Sub-Clause 3.5 and shall be added to the

Contract Price.

If, for reasons not attributable to the Contractor, a Test after Completion on the

Works or any Section cannot be completed during the Contract Period (or anyother period agreed upon by the Employer and the Contractor), then the Works

or such Section shall be deemed to have passed such Test after Completion.

Retesting 11.3 If the Works, or a Section, fail to pass the Tests after Completion, the Employer

or the Contractor may require such failed Tests, and the Tests after Completion

on any related work, to be repeated under the same terms and conditions. If

such failure and retesting result from a default of the Contractor and cause the

Employer to incur additional costs, such costs shall be recoverable from the

Contractor by the Employer, and may be deducted by the Employer from any

monies due, or to become due, to the Contractor.



26

Failure to Pass 11.4 If the following conditions apply, namely:

(a) the Works, or a Section, fail to pass any or all of the Tests after Completion,

(b) the relevant sum payable as liquidated damages for such failure is stated

(or its method of calculation is defined) in the Appendix to Tender, and

(c) the Contractor pays such relevant sum to the Employer during the Contract

Period,

then the Works or such Section shall be deemed to have passed such Tests after

Completion.

If the Works, or a Section, fail to pass a Test after Completion and the

Contractor in consequence proposes to make any adjustment or modification

thereto, the Employer's Representative may instruct the Contractor that the

Employer does not wish such adjustment or modification to be made until a

time that is convenient to the Employer. In such event, the Contractor shall

remain liable to carry out the adjustment or modification, and to satisfy such

Test within a reasonable time of being notified to do so by the Employer's

Representative. If, however, the Employer's Representative fails to give any

such notice during the Contract Period, the Contractor shall be relieved of any

such obligation and the Works or Section (as the case may be) shall be deemed

to have passed such Test after Completion.

If the Contractor incurs additional Cost as a result of any unreasonable delay

by the Employer in permitting access to the Works or Plant by the Contractor,

either to investigate the causes of failure to pass a Test after Completion, or to

carry out any adjustments or modifications, then the Contractor shall be paid

the additional Cost, plus reasonable profit, caused by such delay.

12 Defects Liability

DEFECTS LIABILITYCompletion of 12.1 In order that the Construction Documents and the Works shall be in the

Outstanding Work condition required by the Contract (fair wear and tear excepted) at, or as soonand Remedying as practicable after, the expiry of the Contract Period, the Contractor shall:

Defects (a) complete any work which is outstanding on the date stated in a Taking-

Over Certificate, as soon as practicable after such date, and

(b) execute all work of amendment, reconstruction, and remedying defects or

damage, as may be instructed by the Employer or the Employer’s

Representative during the Contract Period.

If any such defect appears or damage occurs, the Employer or the Employer’s

Representative shall promptly notify the Contractor in writing.

Cost of Remedying 12.2 All work referred to in Sub-Clause 12. 1 (b) shall be executed by the Contractor

Defects at his own cost, if the necessity for such work is due to:

(a) the design of the Works,

(b) Plant, Materials or workmanship not being in accordance with the

Contract, or

(c) failure by the Contractor to comply with any of his other obligations.

If such necessity is due to any other cause, the Employer’s Representative shall

notify the Contractor accordingly and seek agreement to an adjustment to the

Contract Price. In this event, Sub-Clause 14.3 shall apply to such work.

Tests after

Completion



27

Extension of 12.3 The Contract Period shall be extended by a period equal to the sum of any

Contract Period periods, after the Works are taken-over, during which the Works or any Section

or item of Plant cannot be used, for the purposes for which they are intended,

by reason of a defect or damage; except that the Contract Period shall not be

extended by more than two years.

When delivery of Plant and/or Materials, or erection of Plant, or installation of

Materials, has been suspended under Sub-Clause 8.7, the Contractor’s

obligations under this Sub-Clause shall not apply to any defects or damage

occurring more than three years after the Plant and/or Materials wouldotherwise have been delivered, erected and taken-over.

Failure to Remedy 12.4 If the Contractor fails to remedy any defect or damage within a reasonable time,

Defects the Employer or the Employer’s Representative may fix a date on or by which

to remedy the defect or damage, and give the Contractor reasonable notice of

such date.

If the Contractor fails to remedy the defect or damage by such date and the

necessity for such work is due to a cause stated in Sub-Clause 12.2(a), (b) or (c),

the Employer may (at his sole discretion):

(a) carry out the work himself or by others, in a reasonable manner and at the

Contractor's risk and cost, but the Contractor shall have no responsibilityfor such work: the costs properly incurred by the Employer in remedying

the defect or damage shall be recoverable from the Contractor by the

Employer;

(b) require the Employer’s Representative to determine and certify a

reasonable reduction in the Contract Price; or

(c) if the defect or damage is such that the Employer has been deprived of

substantially the whole of the benefit of the Works or parts of the Works,

terminate the Contract in respect of such parts of the Works as cannot be

put to the intended use: the Employer shall then be entitled to recover all

sums paid for such parts of the Works together with the cost of dismantling

the same, clearing the Site and returning Plant and Materials to the

Contractor, and Sub-Clause 15.1 shall not apply.

Removal of 12.5 If the defect or damage is such that it cannot be remedied expeditiously on the

Defective Work Site, the Contractor may, with the consent of the Employer’s Representative or

the Employer, remove from the Site for the purposes of repair any part of the

Works which is defective or damaged.

Further Tests 12.6 If the remedying of any defect or damage is such that it may affect the

performance of the Works, the Employer may require that Tests on Completion

or Tests after Completion, or both, be repeated to the extent necessary. The

requirement shall be made by notice within 28 days after the defect or damage

is remedied. Such Tests shall be carried out in accordance with Clause 9 orClause 11 (as the case may be).

Right of Access 12.7 Until the Performance Certificate has been issued, the Contractor shall have the

right of access to all parts of the Works and to records of the working and

performance of the Works, except as may be inconsistent with any reasonable

security restrictions by the organisation responsible for operating the Works.

Contractor to 12.8 The Contractor shall, if required by the Employer’s Representative, search for

Search the cause of any defect, under the direction of the Employer’s Representative.

Unless the defect is one for which the Contractor is liable, the Cost of such

search, plus reasonable profit, shall be added to the Contract Price.



28

Performance 12.9 The Contract shall not be considered to be completed until the Performance

Certificate Certificate has been signed by the Employer’s Representative and delivered to

the Contractor, stating the date on which the Contractor completed his

obligations to the Employer’s Representative’s satisfaction.

The Performance Certificate shall be given by the Employer’s Representative

by the date 28 days after the expiry of the Contract Period, or as soon after such

date as the Contractor has provided all the Construction Documents and

completed and tested all the Works, including remedying any defects.

Only the Performance Certificate shall be deemed to constitute approval of the

Works.

Unfulfilled 12.10 After the Performance Certificate has been issued, the Contractor and the

Obligations Employer shall remain liable for the fulfilment of any obligation which remains

unperformed at that time. For the purposes of determining the nature and extent

of any such obligation, the Contract shall be deemed to remain in force.

13 Contract Price and Payment

CONTRACT PRICE AND PAYMENTThe Contract Price 13.1 Unless otherwise stated in Part II:

(a) payment for the Works shall be made on a fixed lump sum basis;

(b) the Contract Price shall not be adjusted for changes in the cost of labour,

materials or other matters;

(c) the Contractor shall pay all duties and taxes in consequence of his obligations

under the Contract, and the Contract Price shall not be adjusted

for such costs, except as stated in Sub-Clause 13.16;

(d) any quantities which may be set out in a Schedule are only estimated

quantities and are not to be taken as the actual and correct quantities of the

Works to be executed by the Contractor in fulfilment of his obligations

under the Contract; and

(e) any quantities, prices or rates of payment per unit quantity which may be

set out in a Schedule are only to be used for the purposes stated in such

Schedule.

If any part of the Works is to be paid according to quantity supplied or work done,

the provisions for measurement and valuation shall be as stated in Part II.

Advance Payments 13.2 The Employer will make interest-free advance payments to the Contractor for

his mobilization and design. The total of such advance payments, and the

number and timing of instalments (if more than one), shall be as stated in. the

Appendix to Tender, payable in the proportions of currencies in which the

Contract Price is payable. The Employer’s Representative shall issue an Interim

Payment Certificate for the first instalment after the Contractor has delivered,to the Employer, the performance security in accordance with Sub-Clause 4.2

and a bank guarantee in a form and by a bank acceptable to the Employer in

amounts and currencies equal to the advance payments. Such bank guarantee

shall remain effective until the advance payments have been repaid, but its

amount shall be progressively reduced by the amount repaid by the Contractor

as indicated in Interim Payment Certificates.



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The advance payments shall be repaid through percentage deductions in Interim

Payment Certificates certified by the Employer’s Representative in accordance

with this Clause. Unless other percentages are stated in the Appendix to Tender:

(a) deductions shall commence in the Interim Payment Certificate in which

the total of all certified interim payments (excluding the advance payments

and deductions and repayments of retention) exceeds ten per cent (10%)

of the Contract Price less Provisional Sums; and

(b) deductions shall be made at the amortization rate of one quarter (25%) of

the amount of all Interim Payment Certificates (excluding the advance

payments and deductions and repayments of retention) in the types and

proportionate amounts of currencies of the advance payments, until such

time as the advance payments have been repaid.

If the advance payments have not been repaid prior to the issue of the Taking-

Over Certificate for the Works or prior to termination under Clauses 15, 16 or

19 (as the case may be), the whole of the balance then outstanding shall

immediately become due and payable by the Contractor to the Employer.

Application for 13.3 The Contractor shall submit a statement in six copies to the Employer’s

Interim Payment Representative after the end of each month, in a form approved by the

Certificates Employer’s Representative, showing the amounts to which the Contractorconsiders himself to be entitled, together with supporting documents which

shall include the detailed report on the progress during the month in accordance

with Sub-Clause 4.15. The statement shall include the following items, as

applicable, which shall be expressed in the various currencies in which the

Contract Price is payable, in the sequence listed:

(a) the estimated contract value of the Construction Documents produced and

the Works executed up to the end of the month (including Variations but

excluding items described in sub-paragraphs (b) to (g) below);

(b) any amounts to be added and deducted for changes in legislation in

accordance with Sub-Clause 13.16;

(c) any amount to be deducted for retention, calculated by applying the

percentage of retention stated in the Appendix to Tender to the total of the

above amounts, until the amount so retained by the Employer reaches the

limit of Retention Money (if any) stated in the Appendix to Tender;

(d) any amounts to be added and deducted for the advance payments and

repayments in accordance with Sub-Clause 13.2;

(e) any amounts to be added and deducted for Plant and Materials in

accordance with Sub-Clause 13.5;

(f) any other additions or deductions which may have become due in

accordance with the Contract (including those under Clause 20), other thanunder Sub-Clause 8.6; and

(g) the deduction of the amounts certified in all previous Interim Payment

Certificates.

Schedule of 13.4 If the Contract includes a Schedule of Payments specifying the instalments in

Payments which the Contract Price will be paid, then, unless otherwise stated in such

Schedule:

(a) the instalments quoted in such Schedule shall be used to determine the

contract value for the purposes of sub-paragraph (a) of Sub-Clause 133;

(b) Sub-Clause 13.5 shall not apply; and



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(c) if the payment instalments are not defined by reference to the actual

progress achieved in executing the Works, the Employer’s Representative

shall be entitled to amend such Schedule: such amendment shall be made

in accordance with the provisions of Sub-Clause 3.5 and shall only take

account of the extent to which the actual progress achieved is less than that

on which the instalments in the Schedule were based.

Plant and Materials 13.5 If this Sub-Clause applies, Interim Payment Certificates shall include (i) an

for the Permanent additional amount for Plant and Materials which have been brought to the Site

Works for incorporation in the Permanent Works, and (ii) a deduction when they have been incorporated in the Permanent Works. The Employer’s Representative

shall determine each addition and deduction in accordance with the following

provisions:

(a) no addition shall be included in the Interim Payment Certificate unless, in

the opinion of the Employer’s Representative:

(i) the Plant and Materials are considered to be in accordance with the

Contract;

(ii) the Plant and Materials have been delivered to the Site and are

properly stored on Site and protected against loss, damage or

deterioration;(iii) the Contractor’s records of the requirements, orders, receipts and use

of Plant and Materials are kept in a form approved by the Employer’s

Representative, and such records are available for inspection by the

Employer’s Representative;

(iv) the Contractor has submitted a statement of the Cost of acquiring and

delivering the Plant and Materials to the Site, together with such

documents as may be required for the purpose of evidencing such

Cost; and

(v) the Plant and Materials are those listed in the Appendix to Tender;

(b) the additional amount to be certified shall be the equivalent of eighty percent of the cost of the Plant and Materials delivered to the Site, as

determined by the Employer’s Representative after review of the

documents mentioned in sub-paragraph (a) above, taking account of the

contract value of such Plant and Materials as determined and considered

appropriate by the Employer’s Representative;

(c) the amount of the deduction for any Plant and Materials incorporated in

the Permanent Works shall be equivalent to the addition previously

certified by the Employer’s Representative for such Plant and Materials

under sub-paragraph (b) above; and

(d) the currencies for such additions and deductions shall be determined by the

Employer’s Representative as follows:

(i) in the case of each addition, the currencies shall be those in which the

payment will eventually become due for the relevant item of Plant or

Materials, upon their incorporation in the Permanent Works; and

(ii) in the case of a deduction, the currencies shall be those in which the

addition for the respective item of Plant or Materials had been

certified.



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Issue of Interim Pay- 13.6 No amount will be certified or paid until the Employer has received, and

ment Certificates approved, the performance security in accordance with Sub-Clause 4.2.

Thereafter, the Employer’s Representative shall, within 28 days of receiving a

statement and supporting documents, deliver to the Employer with a copy to

the Contractor an Interim Payment Certificate showing the amount which the

Employer’s Representative considers to be due; if no payment is considered to

be due, the Employer’s Representative shall promptly notify the Contractor

accordingly. Except that the Employer’s Representative shall not be bound to

certify any payment under this Sub-Clause, if the net amount to be certified

(after retention and other deductions) would be less than the minimum amount

of Interim Payment Certificates (if any) stated in the Appendix to Tender.

An Interim Payment Certificate shall not be withheld on account of:

(a) defects: if any thing supplied or work done by the Contractor is not in

accordance with the Contract, the cost of rectification or replacement shall

be deducted by the Employer's Representative from any amount otherwise

due;

(b) part (only) of the payment applied for being disputed: in such case, a

payment certificate shall be issued for the undisputed amount.

The Employer’s Representative may in any payment certificate make any

correction or modification that should properly be made to any previous

certificate.

Payment 13.7 Unless otherwise stated in Part II,

(a) the Employer shall pay the amount certified in each Interim Payment

Certificate within 56 days from the date on which the Employer’s

Representative received the Contractor's statement and supporting

documents; and

(b) the Employer shall pay the amount certified in the Final Payment Certificate

within 56 days from the date of issue of the Certificate.

Payments shall be made into a bank account, nominated by the Contractor, in

the payment country named as such in the Contract. If payments are to be made in

more than one currency, separate bank accounts may be nominated by the

Contractor for each currency, and payments shall be made by the Employer

accordingly.

Delayed Payment 13.8 If payment of any sum payable under Sub-Clause 13.7 is delayed, the

Contractor shall be entitled to receive financing charges compounded monthly

on the amount unpaid during the period of delay. Unless otherwise stated in

Part II, these financing charges shall be calculated at the annual rate three

percentage points above the discount rate of the central bank in the country of

the currency of payment. The Contractor shall be entitled to such paymentwithout formal notice and without prejudice to any other right or remedy.

Payment of Retention 13.9 When the Employer’s Representative has issued the Taking-Over Certificate for

Money the Works, and the Works have passed all specified tests (including the Tests

after Completion, if any), the first half of the Retention Money shall be certified

by the Employer’s Representative for payment to the Contractor. If the Works

are taken over in Sections, the percentage of the first half of the Retention

Money released following the issue of a Taking-Over Certificate for a Section,

and it passing all tests, shall be the percentage value of the Section as stated in

the Appendix to Tender.



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Upon the expiry of the Contract Period, the second half of the Retention Money

shall be certified by the Employer’s Representative for payment to the

Contractor. Except that, if at such time any work shall remain to be executed

under Clause 11 or Clause 12, the Employer’s Representative shall be entitled

to withhold certification, until completion of such work, of so much of the

balance of the Retention Money as shall represent the cost of the work

remaining to be executed.

Statement at 13.10 Not later than 84 days after the issue of the Taking-Over Certificate for the

Completion Works, the Contractor shall submit, to the Employer’s Representative, sixcopies of a statement at completion with supporting documents showing in

detail, in the form approved by the Employer’s Representative under Sub-

Clause 13.3

(a) the final value of all work done in accordance with the Contract up to the

date stated in such Taking-Over Certificate,

(b) any further sums which the Contractor considers to be due, and

(c) an estimate of amounts which the Contractor considers will become due

to him under the Contract.

The estimated amounts shall be shown separately in such statement at

completion. The Employer’s Representative shall certify payment under Sub-Clause 13.6.

Application for 13.11 Not later than 56 days after the issue of the Performance Certificate, the

Final Payment Contractor shall submit to the Employer's Representative six copies of a draft

Certificate final statement with supporting documents showing in detail, in a form

approved by the Employer's Representative:

(a) the value of all work done in accordance with the Contract, and

(b) any further sums which the Contractor considers to be due to him under

the Contract or otherwise.

If the Employer’s Representative disagrees with or cannot verify any part of

the draft final statement, the Contractor shall submit such further information

as the Employer’s Representative may reasonably require and shall make such

changes in the draft as may be agreed between them. The Contractor shall then

prepare and submit to the Employer’s Representative the final statement as

agreed (for the purposes of these Conditions referred to as the “Final

Statement”).

If, following discussions between the Employer’s Representative and the

Contractor and any changes to the draft final statement which may be agreed

between them, it becomes evident that a dispute exists, the Employer’s

Representative shall deliver to the Employer (with a copy to the Contractor) an

Interim Payment Certificate for those parts of the draft final statement whichare not in dispute. The dispute may then be resolved under Clause 20, in which

case the Contractor shall then prepare and submit to the Employer (with a copy

to the Employer’s Representative) a Final Statement in accordance with the

outcome of the dispute.

Discharge 13.12 When submitting the Final Statement, the Contractor shall submit a written

discharge which confirms that the total of the Final Statement represents full

and final settlement of all monies due to the Contractor under the Contract.

Such discharge may state that it shall become effective only after payment due

under the Final Payment Certificate has been made and the performance

security referred to in Sub-Clause 4.2 has been returned to the Contractor.



33

Issue of Final 13.13 The Employer’s Representative shall issue to the Employer, with a copy to the

Payment Certificate Contractor, the Final Payment Certificate within 28 days after receiving the

Final Statement and written discharge in accordance with Sub-Clauses 13.11

and 13.12, stating:

(a) the amount which is finally due, and

(b) after giving credit to the Employer for all amounts previously paid by the

Employer and for all sums to which the Employer is entitled, other than

under Sub-Clause 8.6, the balance, if any, due from the Employer to theContractor or from the Contractor to the Employer as the case may be.

If the Contractor has not applied for a Final Payment Certificate in accordance

with Sub-Clauses 13. 11 and 13.12, the Employer’s Representative shall request

the Contractor to do so. If the Contractor fails to make such an application

within a period of 28 days, the Employer’s Representative shall issue the Final

Payment Certificate for such amount as he considers to be due.

Cessation of 13.14 The Employer shall not be liable to the Contractor for any matter or thing

Employer’s Liability arising out of (or in connection with) the Contract or execution of the Works,

unless the Contractor shall have included a claim for it in his Final Statement

and (except for matters or things arising after the issue of the Taking-OverCertificate for the Works) in the statement at completion described in Sub-

Clause 13.10.

Calculation of 13.15 If the Contract Price is expressed in Local Currency only, but some payments

Payments in Foreign are to be made in another currency, the proportions or amounts of the Local and

Currency Foreign Currencies, and the fixed rates of exchange to be used for calculating

the payments, shall be as stated in the Appendix to Tender. If no rates of

exchange are stated therein, they shall, unless otherwise stated in Part II, be

those prevailing for the Base Date, as determined by the central bank of the

Country.

Changes in 13.16 The Contract Price shall be adjusted to take account of any increase or decrease

Legislation in Cost resulting from changes in legislation of the Country, made after the Base

Date. Such legislation means any law, order, regulation or by-law having the

force of law, including currency restrictions, which affects the Contractor in the

performance of his obligations.

If the Contractor suffers (or will suffer) delay and/or incurs (or will incur)

additional Cost resulting from such changes in legislation, made after the Base

Date, the Contractor shall give notice to the Employer’s Representative. After

receipt of such notice the Employer’s Representative shall proceed in

accordance with Sub-Clause 3.5 to agree or determine:


Clause 8.3, and(b) the amount of such Cost, which shall be added to the Contract Price,




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14 Variations

VARIATIONSRight to Vary 14.1 Variations may be initiated by the Employer’s Representative at any time

during the Contract Period, either by instruction or by a request for the

Contractor to submit a proposal. If the Employer’s Representative requests the

Contractor to submit a proposal and subsequently elects not to proceed with the

change, the Contractor shall be reimbursed for the Cost incurred, including

design services.

The Contractor shall not make any alteration and/or modification of the Works,

unless and until the Employer’s Representative instructs or approves a

Variation. If the Construction Documents or Works are not in accordance with

the Contract, the rectification shall not constitute a Variation.

Value Engineering 14.2 The Contractor may, at any time, submit to the Employer’s Representative a

written proposal which in the Contractor's opinion will reduce the cost of

constructing, maintaining or operating the Works, or improve the efficiency or

value to the Employer of the completed Works, or otherwise be of benefit to

the Employer. Any such proposal shall be prepared at the cost of the Contractor

and shall include the items listed in Sub-Clause 14.3.

Variation Procedure 14.3 If the Employer’s Representative requests a proposal, prior to instructing a

Variation, the Contractor shall submit as soon as practicable:

(a) a description of the proposed design and/or work to be performed and a

programme for its execution,

(b) the Contractor’s proposal for any necessary modifications to the

programme according to Sub-Clause 4.14, and

(c) the Contractor’s proposal for adjustment to the Contract Price, Time for

Completion and/or modifications to the Contract.

The Employer’s Representative shall, as soon as practicable after receipt of

such proposals, respond with approval, rejection or comments.

If the Employer’s Representative instructs or approves a Variation, he shall

proceed in accordance with Sub-Clause 3.5 to agree or determine adjustments

to the Contract Price, Time for Completion and Schedule of Payments.

Adjustment of the Contract Price shall include reasonable profit, and shall take

account of the Contractor's submissions under Sub-Clause 14.2 if applicable.

Payment in 14.4 If the Contract provides for payment of the Contract Price in more than one

Applicable currency, and an adjustment is agreed or fixed as stated above, the amount

Currencies payable in each of the applicable currencies shall be specified when the

adjustment is agreed or fixed. In specifying the amount in each currency, the

Contractor and the Employer’s Representative (or, failing agreement, the

Employer’s Representative) shall take account of the actual or expectedcurrency proportions of the Cost of the varied work, without being bound by

the proportions of various currencies specified for payment of the Contract

Price.

Provisional Sums 14.5 Each Provisional Sum shall only be used, in whole or in part, in accordance

with the Employer’s Representative’s instructions. The total sum paid to the

Contractor shall include only such amounts for the work, supplies or services

to which such Provisional Sums relate as the Employer’s Representative shall

have instructed. For each Provisional Sum, the Employer’s Representative may

order:



35

(a) work to be executed (including Plant, Materials or services to be supplied)

by the Contractor and valued under Sub-Clause 14.3;

(b) Plant, Materials or services to be purchased by the Contractor, for which

payment will be made as follows:

(i) the actual price paid (or due to be paid) by the Contractor, and

(ii) a percentage of the actual price paid (or due to be paid), as stated in

the Appendix to Tender, to cover all other Costs, charges and profit.

The Contractor shall, when required by the Employer’s Representative, producequotations, invoices, vouchers and accounts or receipts in substantiation.

15 Default of Contractor

DEFAULT OF CONTRACTORNotice to Correct 15.1 If the Contractor fails to carry out any of his obligations, or if the Contractor

is not executing the Works in accordance with the Contract, the Employer’s

Representative may give notice to the Contractor requiring him to make good

such failure and remedy the same within a specified reasonable time.

Termination 15.2 If the Contractor:

(a) fails to comply with a notice under Sub-Clause 15.1,(b) abandons or repudiates the Contract,

(c) without reasonable excuse fails:

(i) to commence the Works in accordance with Sub-Clause 8. 1,

(ii) to proceed with the Works in accordance with Clause 8, or

(iii) to demonstrate that sufficient design capability is employed in the

design of the Works to achieve completion within the Time for

Completion,

(d) becomes bankrupt or insolvent, goes into liquidation, has a receiving or

administration order made against him, compounds with his creditors, orcarries on business under a receiver, trustee or manager for the benefit of

his creditors, or if any act is done or event occurs which (under any

applicable law) has a similar effect to any of these acts or events,

(e) fails to comply with a notice issued under Sub-Clause 7.5 within 28

days after having received it, or

(f) assigns the Contract or subcontracts the Works without the required

consent,

then the Employer may, after having given 14 days’ notice to the Contractor,

terminate the Contractor’s employment under the Contract and expel him from

the Site. The Contractor shall then deliver all Construction Documents, andother design documents made by or for him, to the Employer’s Representative.

The Contractor shall not be released from any of his obligations or liabilities

under the Contract. The rights and authorities conferred on the Employer and

the Employer’s Representative by the Contract shall not be affected.

The Employer may upon such termination complete the Works himself and/or

by any other contractor. The Employer or such other contractor may use for

such completion so much of the Construction Documents, other design

documents made by or on behalf of the Contractor, Contractor’s Equipment,



36

Temporary Works, Plant and Materials as he or they may think proper. Upon

completion of the Works, or at such earlier date as the Employer’s

Representative thinks appropriate, the Employer’s Representative shall give

notice that the Contractor's Equipment and Temporary Works will be released

to the Contractor at or near the Site. The Contractor shall remove or arrange

removal of the same from such place without delay and at his cost.

Valuation at Date of 15.3 The Employer’s Representative shall, as soon as possible after termination

Termination under Sub-Clause 15.2, determine and advise the Contractor of the value of the

Construction Documents, Plant, Materials, Contractor's Equipment and Worksand all sums then due to the Contractor as at the date of termination.

Payment after 15.4 After termination under Sub-Clause 15.2, the Employer shall not be liable to

Termination make any further payments to the Contractor until the costs of design,

execution, completion and remedying of any defects, damages for delay in

completion (if any), and all other costs incurred by the Employer, have been

established.

The Employer shall be entitled to recover from the Contractor the extra costs,

if any, of completing the Works after allowing for any sum due to the Contractor

under Sub-Clause 15.3. If there are no such extra costs, the Employer shall pay

any balance to the Contractor.

Bribes 15.5 If the Contractor, or any of his Subcontractors, agents or servants gives or offers

to give to any person any bribe, gift, gratuity or commission as an inducement

or reward:

(a) for doing or forbearing to do any action in relation to the Contract or any

other contract with the Employer, or

(b) for showing or forbearing to show favour or disfavour to any person in

relation to the Contract or to any other contract with the Employer,

then the Employer may, after having given 14 days' notice to the Contractor,

terminate the Contractor's employment under the Contract and expel him from

the Site, and the provisions of this Clause shall apply as if such termination andexpulsion had been made under Sub-Clause 15.2.

16 Default of Employer

DEFAULT OF EMPLOYERContractor’s 16.1 If the Employer fails to pay the Contractor the amount due under any certificate

Entitlement to of the Employer’s Representative, and fails to explain why the Contractor is

Suspend Work not entitled to such amount, within 21 days after the expiry of the time stated

in Sub-Clause 13.7 within which payment is to be made, except for any

deduction that the Employer is entitled to make under the Contract, the

Contractor may suspend work or reduce the rate of work after giving not less

than 7 days’ prior notice to the Employer (with a copy to the Employer’sRepresentative). Such action shall not prejudice the Contractor's entitlements

to payment under Sub-Clause 13.8 and to terminate under Sub-Clause 16.2.

If the Contractor suspends work or reduces the rate of work, and the Employer

subsequently pays the amount due (including payment in accordance with Sub-

Clause 13.8), the Contractor's entitlement under Sub-Clause 16.2 shall lapse in

respect of such delayed payment, unless notice of termination has already been

given, and the Contractor shall resume normal working as soon as is reasonably

possible.



37

If the Contractor suffers delay and/or incurs Cost as a result of suspending work

or reducing the rate of work in accordance with this Sub-Clause, the Contractor

shall give notice to the Employer’s Representative. After receipt of such notice,

the Employer’s Representative shall proceed in accordance with Sub-

Clause 3.5 to agree or determine:


Clause 8.3, and

(b) the amount of such Cost plus reasonable profit, which shall be added to theContract Price,


Termination 16.2 If the Employer:

(a) fails to pay the Contractor the amount due under any certificate of the

Employer’s Representative within 42 days after the expiry of the time

stated in Sub-Clause 13.7 within which payment is to be made (except for

any deduction that the Employer is entitled to make under the Contract),

(b) becomes bankrupt or insolvent, goes into liquidation, has a receiving or

administration order made against him, compounds with his creditors, or

carries on business under a receiver, trustee or manager for the benefit ofhis creditors, or if any act is done or event occurs which (under any

applicable law) has a similar effect to any of these acts or events,

(c) consistently fails to meet the Employer’s obligations under the Contract,

or

(d) assigns the Contract without the Contractor’s consent,

or, if a prolonged suspension affects the whole of the Works as described in

Sub-Clause 8. 10,

then the Contractor may terminate his employment under the Contract by

giving notice to the Employer, with a copy to the Employer’s Representative.

Such notice shall take effect 14 days after the giving of the notice.

Cessation of Work 16.3 After termination under Sub-Clause 2.4 or Sub-Clause 16.2, the Contractor

and Removal of shall:

Contractor’s (a) cease all further work, except for such work as may be necessary and

Equipment instructed by the Employer’s Representative for the purpose of making

safe or protecting those parts of the Works already executed, and any work

required to leave the Site in a clean and safe condition,

(b) hand over all Construction Documents, Plant and Materials for which the

Contractor has received payment,

(c) hand over those other parts of the Works executed by the Contractor up to

the date of termination, and

(d) remove all Contractor’s Equipment which is on the Site and repatriate all

his staff and labour from the Site.

Any such termination shall be without prejudice to any other right of the

Contractor under the Contract.

Payment on 16.4 After termination under Sub-Clause 16.2, the Employer shall return the

Termination performance security, and shall pay the Contractor an amount calculated and

certified in accordance with Sub-Clause 19.6 plus the amount of any loss or

damage, including loss of profit, which the Contractor may have suffered in

consequence of termination.



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17 Risk and Responsibility

RISK AND RESPONSABILITYIndemnity 17.1 The Contractor shall indemnify and hold harmless the Employer, the

Employer’s Representative, their contractors, agents and employees from and

against all claims, damages, losses and expenses arising out of or resulting from

the Works, including professional services provided by the Contractor.

These indemnification obligations shall be limited to claims, damages, losses

and expenses which are attributable to bodily injury, sickness, disease or death,

or to injury to or destruction of physical property (other than the Works),

including consequential loss of use. Such obligations shall also be limited to

the extent that such claims, damages, losses or expenses are caused in whole

or in part by a breach of a duty of care, imposed by law on the Contractor or

anyone directly or indirectly employed by the Contractor.

Contractor’s Care of 17.2 The Contractor shall take full responsibility for the care of the Works from the

the Works Commencement Date until the date of issue of the Taking-Over Certificate,

when responsibility shall pass to the Employer. If the Employer’s

Representative issues a Taking-Over Certificate for any Section or part of the

Works, the Contractor shall cease to be responsible for the care of that Section

or part from the date of issue of such Taking-Over Certificate, whenresponsibility shall pass to the Employer.

The Contractor shall take responsibility for the care of any outstanding work

which is required to be completed prior to the expiry of the Contract Period,

until the Employer’s Representative confirms in writing that such outstanding

work has been completed.

If any loss or damage happens to the Works, arising from any cause other than

the Employer’s risks listed in Sub-Clause 17.3, during the period for which the

Contractor is responsible, the Contractor shall rectify such loss or damage, at

his cost, so that the Works conform with the Contract. The Contractor shall also

be liable for any loss or damage to the Works caused by any operations carried

out by the Contractor after the date of issue of the Taking-Over Certificate.

Employer’s Risks 17.3 The Employer’s risks are:

(a) war, hostilities (whether war be declared or not), invasion, act of foreign

enemies,

(b) rebellion, revolution, insurrection, or military or usurped power, or civil

war,

(c) ionising radiations, or contamination by radio-activity from any nuclear

fuel, or from any nuclear waste from the combustion of nuclear fuel,

radio-active toxic explosive, or other hazardous properties of any

explosive nuclear assembly or nuclear component of such assembly,(d) pressure waves caused by aircraft or other aerial devices travelling at sonic

or supersonic speeds,

(e) riot, commotion or disorder, unless solely restricted to employees of the

Contractor or of his Subcontractors and arising from the conduct of the

Works,

(f) loss or damage due to the use or occupation by the Employer of any

Section or part of the Works, except as may be provided for in the Contract,

and

(g) any operation of the forces of nature against which an experienced

contractor could not reasonably have been expected to take precautions.



39

Consequences of 17.4 The Contractor shall give notice, to the Employer’s Representative, of an

Employer’s Risks Employer’s risk upon it being foreseen by, or becoming known to, the

Contractor. If an Employer’s risk results in loss or damage, the Contractor shall

rectify such loss or damage to the extent required by the Employer’s

Representative. If the Contractor suffers delay and/or incurs Cost as a result of

an Employer’s risk, the Contractor shall give further notice to the Employer’s

Representative. After receipt of such further notice the Employer’s

Representative shall proceed in accordance with Sub-Clause 3.5 to agree or

determine:


Clause 8.3, and



Contractor’s Risks 17.5 The Contractor’s risks are all risks other than the Employer’s risks listed in Sub-

Clause 17.3.

Limitation of 17.6 The Contractor shall in no event be liable to the Employer, by way of indemnity

Liability or by reason of any breach of the Contract or in tort or otherwise, for loss of

use of any part (or all) of the Works or for loss of production, loss of profit or

loss of any contract or for any indirect special or consequential loss or damage

which may be suffered by the Employer in connection with the Contract. The

total liability of the Contractor to the Employer under the Contract shall not

exceed the Contract Price. Except that this Sub-Clause shall not limit the

liability of the Contractor:

(a) under Sub-Clauses 4.19, 4.20, 5.9, 8.6 and 11.4,

(b) under any other provisions of the Contract which expressly impose a

greater liability,

(c) in cases of fraud, wilful misconduct or illegal or unlawful acts, or

(d) in cases of acts or omissions of the Contractor which are contrary to themost elementary rules of diligence which a conscientious contractor would

have followed in similar circumstances.



40

18 InsuranceINSURANCE

Insurance for 18.1 The Contractor shall effect professional indemnity insurance, which shall

Design insure the Contractor's liability by reason of professional negligence in the

design of the Works. Such insurance shall be for a limit of not less than the

amount specified in the Appendix to Tender.

The Contractor shall use his best endeavours to maintain such professional

indemnity insurance in full force and effect throughout the periods of his

liability, under the Contract and under the law of the Country. The Contractorundertakes to give the Employer reasonable notice in the event of difficulty (if

any) in extending, renewing or reinstating such insurance.

Insurance for Works 18.2 The Contractor shall insure the Construction Documents, Plant, Materials and

and Contractor’s Works in the joint names of the Employer, the Contractor and Subcontractors,

Equipment against all loss or damage. This insurance shall cover loss or damage from any

cause other than the Employer's risks listed in Sub-Clause 17.3 sub-paragraphs

(a), (b), (c) and (d) in so far as such insurance is readily obtainable. Such

insurance shall be for a limit of not less than the full replacement cost (including

profit) and shall also cover the costs of demolition and removal of debris. Such

insurance shall be in such a manner that the Employer and the Contractor are

covered from the date by which the evidence is to be submitted under Sub-

Clause 18.5(a), until the date of issue of the Taking-Over Certificate for the

Works. The Contractor shall extend such insurance to provide cover until the

date of issue of the Performance Certificate, for loss or damage for which the

Contractor is liable arising from a cause occurring prior to the issue of the

Taking-Over Certificate, and for loss or damage occasioned by the Contractor

or Subcontractors in the course of any other operations (including those under

Clauses 11 and 12).

The Contractor shall insure the Contractor’s Equipment in the joint names of

the Employer, the Contractor and Subcontractors, against all loss or damage.

This insurance shall cover loss or damage from any cause other than theEmployer’s risks listed in Sub-Clause 17.3 sub-paragraphs (a), (b), (c) and (d)

in so far as such insurance is readily obtainable. Such insurance shall be for a

limit of not less than the full replacement value (including delivery to Site).

Such insurance shall be in such a manner that each item of equipment is insured

while it is being transported to the Site and throughout the period it is on or

near the Site.

Insurance against 18.3 The Contractor shall insure against liability to third parties, in the joint names

Injury to Persons of the Employer, the Contractor and Subcontractors, for any loss, damage, death

and Damage to or bodily injury which may occur to any physical property (except things

Property insured under Sub-Clause 18.2) or to any person (except persons insured under

Sub-Clause 18.4), which may arise out of the performance of the Contract andoccurring before the issue of the Performance Certificate. Such insurance shall

be for a limit of not less than the amount specified in the Appendix to Tender.

Insurance for 18.4 The Contractor shall effect and maintain insurance against losses and claims

Workers arising from the death or injury to any person employed by the Contractor or

any Subcontractor, in such a manner that the Employer and the Employer’s

Representative are indemnified under the policy of insurance. For a

Subcontractor's employees, such insurance may be effected by the

Subcontractor, but the Contractor shall be responsible for compliance with this

Clause.



41

General 18.5 Each insurance policy shall be consistent with the general terms agreed in

Requirements for writing prior to the Effective Date, and such agreement shall take precedence

Insurances over the provisions of this Clause.

The Contractor shall, within the respective periods stated in the Appendix to

Tender (calculated from the Commencement Date), submit to the Employer:

(a) evidence that the insurances described in this Clause have been effected, and

(d) copies of the policies for the insurances described in Sub-Clauses 18.2 and

18.3.When each premium has been paid, the Contractor shall submit copy receipts

to the Employer. The Contractor shall also, when providing such evidence,

policies and receipts to the Employer, notify the Employer’s Representative of

so doing.

The Contractor shall effect all insurances for which he is responsible with insurers

and in terms approved by the Employer. Each policy insuring against loss or

damage shall provide for payments to be made in the currencies required to rectify

such loss or damage. Payments received from insurers shall be used for the

rectification of such loss or damage.

The Contractor (and, if appropriate, the Employer) shall comply with theconditions stipulated in each of the insurance policies. The Contractor shall

make no material alteration to the terms of any insurance without the prior

approval of the Employer. If an insurer makes (or purports to make) any such

alteration, the Contractor shall notify the Employer immediately.

If the Contractor fails to effect and keep in force any of the insurances required

under the Contract, or fails to provide satisfactory evidence, policies and

receipts in accordance with this Sub-Clause, the Employer may, without

prejudice to any other right or remedy, effect insurance for the coverage

relevant to such default, and pay the premiums due. Such payments shall be

recoverable from the Contractor by the Employer, and may be deducted by the

Employer from any monies due, or to become due, to the Contractor. Nothing in this Clause limits the obligations, liabilities or responsibilities of the

Contractor or the Employer, under the other terms of the Contract or otherwise.

Any amounts not insured or not recovered from the insurers shall be borne by the

Contractor and/or the Employer accordingly.

19 Force MajeureFORCE MAJEURE

Definition of Force 19.1 In this Clause, “force majeure” means an event beyond the control of the

Majeure Employer and the Contractor, which makes it impossible or illegal for a party

to perform, including but not limited to:

(a) act of God;

(b) war, hostilities (whether war be declared or not), invasion, act of foreign

enemies, mobilization, requisition, or embargo;

(c) rebellion, revolution, insurrection, or military or usurped power, or civil

war;

(d) contamination by radio-activity from any nuclear fuel, or from any nuclear

waste from the combustion of nuclear fuel, radio-active toxic explosive, or

other hazardous properties of any explosive nuclear assembly or nuclear

component of such assembly;



42

(e) riot, commotion or disorder, unless solely restricted to employees of the

Contractor or of his Subcontractors.

Effect of Force 19.2 Neither the Employer nor the Contractor shall be considered in default or in

Majeure Event contractual breach to the extent that performance of obligations is prevented by

a force majeure event which arises after the Effective Date.

Contractor’s 19.3 Upon occurrence of an event considered by the Contractor to constitute force

Responsibility majeure and which may affect performance of his obligations, he shall promptly

notify the Employer’s Representative, and shall endeavour to continue to

perform his obligations as far as reasonably practicable. The Contractor shall

also notify the Employer’s Representative of any proposals, including any

reasonable alternative means for performance, but shall not effect such

proposals without the consent of the Employer’s Representative.

Employer’s 19.4 Upon occurrence of an event considered by the Employer to constitute force

Responsibility majeure and which may affect performance of his obligations, he shall promptly

notify the Contractor and the Employer’s Representative, and shall endeavour

to continue to perform his obligations as far as reasonably practicable. The

Employer shall also notify the Employer’s Representative and the Contractor

of any proposals, with the objectives of completing the Works and mitigating

any increased costs to the Employer and the Contractor.

Payment to 19.5 If, in consequence of force majeure, the Works shall suffer loss or damage, the

Contractor Contractor shall be entitled to have included, in an Interim Payment Certificate,

the Cost of work executed in accordance with the Contract, prior to the event

of force majeure. If the Contractor incurs additional Cost in complying with

Sub-Clause 19.3, such Cost shall be determined by the Employer’s

Representative in accordance with the provisions of Sub-Clause 3.5 and shall

be added to the Contract Price.

Optional 19.6 Irrespective of any extension of time, if a force majeure event occurs and its

Termination, effect continues for a period of 182 days, either the Employer or the Contractor

Payment and may give to the other a notice of termination, which shall take effect 28 days

Release after the giving of the notice. If, at the end of the 28-day period, the effect ofthe force majeure continues, the Contract shall terminate. If the Contract is

terminated under this Sub-Clause, Sub-Clause 2.4 or Sub-Clause 16.2, the

Employer’s Representative shall determine the value of the work done and:

(a) the amounts payable for any work carried out for which a price is stated

in the Contract;

(b) the Cost of Plant and Materials ordered for the Works which have been

delivered to the Contractor, or of which the Contractor is liable to accept

delivery: such Plant and Materials shall become the property of (and be at

the risk of) the Employer when paid for by the Employer, and the

Contractor shall place the same at the Employer’s disposal;(c) any other Cost or liability which in the circumstances was reasonably

incurred by the Contractor in the expectation of completing the Works;

(d) the reasonable Cost of removal of Temporary Works and Contractor’s

Equipment from the Site and the return of such items to the Contractor's

works in his country (or to any other destination at no greater cost); and

(e) the reasonable Cost of repatriation of the Contractor’s staff and labour

employed wholly in connection with the Works at the date of such

termination;

and issue an Interim Payment Certificate in accordance with Clause 13.



43

Release from 19.7 If under the law of the Contract the Employer and the Contractor are released

Performance under from further performance, the sum payable by the Employer to the Contractor

the Law shall be the same as would have been payable under Sub-Clause 19.6 if the

Contract had been terminated under that Sub-Clause.

20 Claims, Disputes and ArbitrationCLAIMS, DISPUTE AND ARBITRATION

Procedure for 20.1 If the Contractor intends to claim any additional payment under any Clause of

Claims these Conditions or otherwise, the Contractor shall give notice to theEmployer’s Representative as soon as possible and in any event within 28 days

of the start of the event giving rise to the claim.

The Contractor shall keep such contemporary records as may be necessary to

substantiate any claim, either on the Site or at another location acceptable to

the Employer’s Representative. Without admitting the Employer’s liability, the

Employer’s Representative shall, on receipt of such notice, inspect such records

and may instruct the Contractor to keep further contemporary records. The

Contractor shall permit the Employer’s Representative to inspect all such

records, and shall (if instructed) submit copies to the Employer’s

Representative.

Within 28 days of such notice, or such other time as may be agreed by the

Employer’s Representative, the Contractor shall send to the Employer’s

Representative an account, giving detailed particulars of the amount and basis

of the claim. Where the event giving rise to the claim has a continuing effect,

such account shall be considered as interim. The Contractor shall then, at such

intervals as the Employer’s Representative may reasonably require, send

further interim accounts giving the accumulated amount of the claim and any

further particulars. Where interim accounts are sent to the Employer’s

Representative, the Contractor shall send a final account within 28 days of the

end of the effects resulting from the event.

If the Contractor fails to comply with this Sub-Clause, he shall not be entitledto additional payment.

Payment of Claims 20.2 The Contractor shall be entitled to have included in any Interim Payment

Certificate such amount for any claim as the Employer’s Representative

considers due. If the particulars supplied are insufficient to substantiate the

whole of the claim, the Contractor shall be entitled to payment for such part of

the claim as has been substantiated.

Dispute 20.3 Unless the member or members of the Dispute Adjudication Board have been

Adjudication Board previously mutually agreed upon by the parties and named in the Contract, the

parties shall, within 28 days of the Effective Date, jointly ensure the

appointment of a Dispute Adjudication Board. Such Dispute Adjudication

Board shall comprise suitably qualified persons as members, the number of

members being either one or three, as stated in the Appendix to Tender. If the

Dispute Adjudication Board is to comprise three members, each party shall

nominate one member for the approval of the other party, and the parties shall

mutually agree upon and appoint the third member (who shall act as chairman).

The terms of appointment of the Dispute Adjudication Board shall:

(a) incorporate the model terms published by the Fédération Intemationale des

Ingénieurs-Conseils (FIDIC),

(b) require each member of the Dispute Adjudication Board to be, and to

remain throughout the appointment, independent of the parties,



44

(c) require the Dispute Adjudication Board to act impartially and in

accordance with the Contract, and

(d) include undertakings by the parties (to each other and to the Dispute

Adjudication Board) that the members of the Dispute Adjudication Board

shall in no circumstances be liable for breach of duty or of contract arising

out of their appointment; the parties shall indemnify the members against

such claims.

The terms of the remuneration of the Dispute Adjudication Board, including

the remuneration of each member and of any specialist from whom the DisputeAdjudication Board may require to seek advice, shall be mutually agreed upon

by the Employer, the Contractor and each member of the Dispute Adjudication

Board when agreeing such terms of appointment. In the event of disagreement,

the remuneration of each member shall include reimbursement for reasonable

expenses, a daily fee in accordance with the daily fee established from time to

time for arbitrators under the administrative and financial regulations of the

International Centre for Settlement of Investment Disputes, and a retainer fee

per calendar month equivalent to three times such daily fee.

The Employer and the Contractor shall each pay one-half of the Dispute

Adjudication Board's remuneration in accordance with its terms of

remuneration. If, at any time, either party shall fail to pay its due proportion of

such remuneration, the other party shall be entitled to make payment on his

behalf and recover it from the party in default.

The Dispute Adjudication Board’s appointment may be terminated only by

mutual agreement of the Employer and the Contractor. The Dispute

Adjudication Board’s appointment shall expire when the discharge referred to

in Sub-Clause 13.12 shall have become effective, or at such other time as the

parties may mutually agree.

If, at any time, the parties so agree, they may appoint a suitably qualified person

to replace (or to be available to replace) any or all members of the Dispute

Adjudication Board. The appointment will come into effect if a member of theDispute Adjudication Board declines to act or is, unable to act as a result of

death, disability, resignation or termination of appointment. If a member so

declines or is unable to act, and no such replacement is available to act, the

member shall be replaced in the same manner as such member was to have been

nominated.

If any of the following conditions apply, namely:

(a) the parties fail to agree upon the appointment of the sole member of a one-

person Dispute Adjudication Board within 28 days of the Effective Date,

(b) either party fails to nominate an acceptable member, for the Dispute

Adjudication Board of three members, within 28 days of the EffectiveDate,

(c) the parties fail to agree upon the appointment of the third member (to act

as chairman) within 28 days of the Effective Date, or

(d) the parties fail to agree upon the appointment of a replacement member of the

Dispute Adjudication Board within 28 days of the date on which

a member of the Dispute Adjudication Board declines to act or is unable

to act as a result of death, disability, resignation or termination of

appointment,

then the person or administration named in the Appendix to the Tender shall,

after due consultation with the parties, nominate such member of the DisputeAdjudication Board, and such nomination shall be final and conclusive.



45

Procedure for 20.4 If a dispute arises between the Employer and the Contractor in connection with,

Obtaining Dispute or arising out of, the Contract or the execution of the Works, including any

Adjudication dispute as to any opinion, instruction, determination, certification or valuation

Board’s Decision of the Employer’s Representative, the dispute shall initially be referred in

writing to the Dispute Adjudication Board for its decision, with a copy to the

other party. Such reference shall state that it is made under this Sub-Clause. The

parties shall promptly make available to the Dispute Adjudication Board all

such information, access to the Site, and appropriate facilities, as the Dispute

Adjudication Board may require for the purposes of rendering its decision. No

later than the fifty-sixth day after the day on which it received such reference,

the Dispute Adjudication Board, acting as a panel of expert(s) and not as

arbitrator(s), shall give notice of its decision to the parties. Such notice shall

include reasons and shall state that it is given under this Sub-Clause.

Unless the Contract has already been repudiated or terminated, the Contractor

shall, in every case, continue to proceed with the Works with all due diligence,

and the Contractor and the Employer shall give effect forthwith to every

decision of the Dispute Adjudication Board, unless and until the same shall be

revised, as hereinafter provided, in an amicable settlement or an arbitral award.

If either party is dissatisfied with the Dispute Adjudication Board’s decision,

then either party, on or before the twenty-eighth day after the day on which itreceived notice of such decision, may notify the other party of its dissatis-

faction. If the Dispute Adjudication Board fails to give notice of its decision on

or before the fifty-sixth day after the day on which it received the reference,

then either party, on or before the twenty-eighth day after the day on which the

said period of fifty-six days has expired, may notify the other party of its

dissatisfaction. In either event, such notice of dissatisfaction shall state that it

is given under this Sub-Clause, such notice shall set out the matters in dispute

and the reason(s) for dissatisfaction and, subject to Sub-Clauses 20.7 and 20.8,

no arbitration in respect of such dispute may be commenced unless such notice

is given.

If the Dispute Adjudication Board has given notice of its decision as to a matterin dispute to the Employer and the Contractor and no notice of dissatisfaction

has been given by either party on or before the twenty-eighth day after the day

on which the parties received the Dispute Adjudication Board's decision, then

the Dispute Adjudication Board's decision shall become final and binding upon

the Employer and the Contractor.

Amicable Settlement 20.5 Where notice of dissatisfaction has been given under Sub-Clause 20.4, the

parties shall attempt to settle such dispute amicably before the commencement

of arbitration. Provided that unless the parties agree otherwise, arbitration may

be commenced on or after the fifty-sixth day after the day on which notice of

dissatisfaction was given, even if no attempt at amicable settlement has been

made.

Arbitration 20.6 Any dispute in respect of which:

(a) the decision, if any, of the Dispute Adjudication Board has not become

final and binding pursuant to Sub-Clause 20.4, and

(b) amicable settlement has not been reached,

shall be finally decided by international arbitration. The arbitration rules under

which the arbitration is conducted, the institution to nominate the arbitrator(s)

or to administer the arbitration rules (unless named therein), the number of



46

arbitrators, and the language and place of such arbitration shall be as set out

in the Appendix to Tender. The arbitrator(s) shall have full power to open up,

review and revise any decision of the Dispute Adjudication Board.

Neither party shall be limited, in the proceedings before such arbitrator(s),

to the evidence or arguments previously put before the Dispute Adjudication

Board to obtain its decision.

Arbitration may be commenced prior to or after completion of the Works. The

obligations of the parties and the Dispute Adjudication Board shall not be

altered by reason of the arbitration being conducted during the progress of the

Works.

Failure to Comply 20.7 Where neither party has given notice of dissatisfaction within the period stated

with Dispute in Sub-Clause 20.4 and the Dispute Adjudication Board's related decision, if

Adjudication any, has become final and binding, either party may, if the other party fails to

Board's Decision comply with such decision, and without prejudice to any other rights it may

have, refer the failure itself to arbitration under Sub-Clause 20.6. The

provisions of Sub-Clauses 20.4 and 20.5 shall not apply to any such reference.

Expiry of Dispute 20.8 When the appointment of the Dispute Adjudication Board and of any

Adjudication replacement has expired, any such dispute referred to in Sub-Clause 20.4 shall

Board’s be finally settled by arbitration pursuant to Sub-Clause 20.6. The provisions ofAppointment Sub-Clauses 20.4 and 20.5 shall not apply to any such reference.



i

Index Sub-Clause Page

INDEX

Access, Right of 12.7 27

Access Route 4.12 10

Access to and Possession of the Site 2.2 6

Advance Payments 13.2 28

Agreement, Contract 1.5 4

Amicable Settlement 20.5 45Arbitration 20.6 45

Bribes 15.5 36

Care of the Works 17.2 38

Cessation of Work after Termination 16.3 37

Claims, Payment of 20.2 43

Claims, Procedure for 20.1 43

Commencement of Works 8.1 20

Communications 1.8 4

Conduct, Disorderly 6.10 18

Confidential Details 1.12 5

Contract Period, Extension of 12.3 27

Contract Price 13.1 28

Contractor to Search 12.8 27

Contractor’s Entitlement to Suspend Work 16.1 36

Contractor’s Equipment 4.16 12

Contractor’s Representative 4.3 8

Contractor’s Undertaking 5.3 15

Defective Work, Removal of 12.5 27

Defects, Failure to Remedy 12.4 27

Defects, Remedying 12.1 26

Definitions 1.1 1

Delay, Liquidated Damages for 8.6 21Delays Caused by Authorities 8.4 21

Delivery to Site 7.2 18

Discharge 13.12 32

Dispute Adjudication Board 20.3 43

Dispute Adjudication Board’s Appointment, Expiry of 20.8 46

Dispute Adjudication Board’s Decision, Failure to Comply with 20.7 46

Dispute Adjudication Board’s Decision, Procedure for Obtaining 20.4 45

Disputes, Amicable Settlement of 20.5 45

Disputes, Arbitration of 20.6 45

Disputes, Dispute Adjudication Board’s Decision on 20.4 45

Documents, Contractor’s Use of Employer’s 1.11 5

Documents, Employer’s Use of Contractor's 1.10 5Documents on Site 1.7 4

Documents, Preparation of Construction 5.2 14

Documents, Priority of 1.6 4

Documents, Provision of Construction 1.9 5

Drawings, As-Built 5.6 15

Electricity, Water and Gas 4.19 12

Electronic Transmission 1.8 4

Employer Supplied Machinery and Materials 4.20 12

Employer’s Liability, Cessation of 13.14 33

Employer’s Representative, Requirements for 3.2 7

Employer’s Representative’s Authority to Delegate 3.3 7

Employer’s Representative’s Duties and Authority 3.1 6



ii


Employer’s Representative’s Instructions 3.4 7

Employer’s Representative to Attempt Agreement 3.5 7

Environment, Protection of 4.18 12

Error by Contractor 5.8 16

Error by Employer’s Representative 3.4 7

Execution, Manner of 7.1 18Extension of Contract Period 12.3 27

Extension of Time for Completion 8.3 20

Final Payment Certificate, Application for 13.11 32

Final Payment Certificate, Issue of 13.13 33

Force Majeure, Contractor's Responsibility after 19.3 42

Force Majeure, Definition of 19.1 41

Force Majeure, Employer’s Responsibility after 19.4 42

Force Majeure Event, Effect of 19.2 42

Force Majeure: Optional Termination, Payment and Release 19.6 42

Force Majeure, Payment to Contractor after 19.5 42

Force Majeure: Release from Performance under the Law 19.7 43Foreign Currency, Calculation of Payments in 13.15 33

Fossils 4.24 13

Headings 1.2 4

Health and Safety 6.7 17

Indemnity 17.1 38

Inspection 7.3 19

Instructions of Employer’s Representative 3.4 7

Insurance against Injury to Persons and Damage to Property 18.3 40

Insurance for Design 18.1 39

Insurance for Workers 18.4 40

Insurance for Works and Contractor’s Equipment 18.2 40Insurances, General Requirements for 18.5 40

Interim Payment Certificates, Application for 13.3 29

Interim Payment Certificates, Issue of 13.6 31

Interpretation 1.3 4

Joint and Several Liability 1.14 5

Labour and Staff, Engagement of 6.1 17

Labour and Staff, Facilities for 6.6 17

Labour Laws 6.4 17

Labour, Wages and Conditions of 6.2 17

Language 1.4 4Law 1.4 4

Laws, Compliance with 1.13 5

Legislation, Changes in 13.16 33

Liability, Joint and Several 1.14 5

Liability, Limitation of 17.6 39

Licences, Permits or Approvals 2.3 6

Liquidated Damages for Delay 8.6 21



iii


Machinery and Materials Supplied by the Employer 4.20 12

Marginal Notes 1.2 4

Materials and Plant, Ownership of 7.6 19

Materials and Plant, Payment for 13.5 30

Notice to Correct 15.1 35

Obligations, Contractor’s General 4.1 7

Obligations, Design 5.1 14

Obligations, Employer’s General 2.1 6

Obligations, Unfulfilled 12.10 28

Operation and Maintenance Manuals 5.7 16

Outstanding Work, Completion of 12.1 26

Patent Rights 5.9 16

Payment 13.7 31

Payment, Delayed 13.8 31

Payment in Applicable Currencies 14.4 34Performance Certificate 12.9 28

Performance Security 4.2 8

Permits, Licences or Approvals 2.3 6

Personnel, Contractor's 6.9 18

Persons in the Service of Others 6.3 17

Plant and Materials, Ownership of 7.6 19

Plant and Materials, Payment for 13.5 30

Programme 4.14 11

Progress, Rate of 8.5 21

Progress Reports 4.15 11

Provisional Sums 14.5 34

Quality Assurance 4.8 9

Regulations and Laws, Compliance with 1.13 5

Regulations, Technical 5.4 15

Rejection 7.5 19

Remedying Defects 12.1 26

Remedying Defects, Cost of 12.2 26

Removal of Contractor’s Equipment after Termination 16.3 37

Reports on Progress 4.15 11

Representative, Contractor’s 4.3 8

Representative, Employer’s 3.1 6

Retention Money, Payment of 13.9 31

Rights of Way and Facilities 4.13 11Risks, Contractor’s 17.5 39

Risks, Employer’s 17.3 38

Risks, Employer’s, Consequences of 17.4 39

Safety 6.7 17

Safety Precautions 4.17 12

Samples 5.5 15

Schedule of Payments 13.4 29

Security, Performance 4.2 8



iv


Setting Out 4.7 9

Site, Access to and Possession of 2.2 6

Site, Clearance of 4.21 13

Site, Contractor's Operations on 4.23 13

Site Data 4.9 10

Site, Delivery to 7.2 18Site, Security of 4.22 13

Staff and Labour, Engagement of 6.1 17

Staff and Labour, Facilities for 6.6 17

Standards and Regulations, Technical 5.4 15

Statement at Completion 13.10 32

Statement, Contractor's Monthly 13.3 29

Statement, Final 13.11 32

Statutes, Regulations and Laws, Compliance with 1.1 35

Sub-Surface Conditions, Unforeseeable 4.11 10

Subcontractors 4.5 9

Subcontractor’s Obligations, Assignment of 4.6 9

Superintendence, Contractor's 6.8 18Suspension, Consequences of 8.8 22

Suspension of Work 8.7 21

Suspension, Payment for Plant and Materials in Event of 8.9 22

Suspension, Prolonged 8.10 22

Suspension, Resumption of Work after 8.11 22

Taking-Over Certificate 10.1 23

Technical Standards and Regulations 5.4 15

Terminate, Employer’s Entitlement to 2.4 6

Termination by Contractor 16.2 37

Termination by Contractor, Payment on 16.4 37

Termination by Employer 15.2 35

Termination by Employer, Payment after 15.4 36

Termination by Employer, Valuation at Date of 15.3 36

Testing 7.4 19

Tests after Completion, Delayed 11.2 25

Tests after Completion, Failure to Pass 11.4 26

Tests after Completion: Obligations 11.1 25

Tests after Completion: Retesting 11.3 25

Tests, Further 12.6 27

Tests on Completion, Delayed 9.2 23

Tests on Completion, Failure to Pass 9.4 23

Tests on Completion, Interference with 10.3 24

Tests on Completion: Obligations 9.1 23

Tests on Completion: Retesting 9.3 23Time for Completion 8.2 20

Time for Completion, Extension of 8.3 20

Unforeseeable Sub-Surface Conditions 4.11 10

Use by the Employer 10.2 24

Value Engineering 14.2 34

Variation Procedure 14.3 34

Variations: Right to Vary 14.1 34

Water, Electricity and Gas 4.19 12

Working Hours 6.5 17

Works, Contractor’s Care of 17.2 38Works, Co-ordination of 4.4 9

Works, Matters Affecting the Execution of 4.10 10



a

CONDITIONS OF CONTRACT FOR DESIGN-BUILD AND TURNKEY

FIDIC MODEL TERMS OF APPOINTMENT FOR A DISPUTE ADJUDICATION BOARD

TERMS OF APPOINTMENT FOR A BOARD OF THREE MEMBERS1

THESE TERMS OF APPOINTMENT OF A BOARD MEMBER ARE MADE BETWEEN:

(1) [name of Employer] of [address of Employer] (hereinafter called “the Employer”)

(2) [name of Contractor] of [address of Contractor] (hereinafter called “the Contractor”)(3) [name of Board Member] of [address of Board Member] (hereinafter called “the Board Member”)

WHEREAS

A. The Employer and the Contractor (hereinafter jointly referred to as “the Parties”) have on the [ ] day of

2000[ ] entered into a Contract (hereinafter called “the Contract”) for the execution of [ ] (hereinafter

called “the Project”).

B. By Sub-Clause 20.3 of the Conditions of Contract (hereinafter called “the Conditions”) provision is

made for the constitution of a Dispute Adjudication Board (hereinafter called “the Board”) which shall

comprise three suitably qualified persons as stated in the Appendix to Tender.

C. The Board Member has agreed to serve as [one of the members of) [chairman of] the Board on theterms set out herein.

NOW IT IS HEREBY AGREED as follows:

1. The Board Member

(1) hereby accept this appointment to the Board which is a personal appointment and agrees to be bound by

these Terms of Appointment and Sub-Clauses 20.3 and 20.4 of the Conditions as if they were set out

herein;

(2) shall be entitled notwithstanding such acceptance to resign this appointment on giving reasonable

notice to the Parties.

2. These Terms of Appointment when executed by the Parties and the Board Member shall take effect when

the Parties and the last of the three members of the Board have executed terms of appointment.

3. The Board Member shall be and remain impartial and independent of the Parties and shall be under a

continuing duty to disclose in writing to each of them and to the other members of the Board any fact or

circumstance which might be such as to call into question his impartiality or independence.

Without prejudice to the generality of the foregoing the Board Member

(a) shall have no interest financial or otherwise in either of the Parties or the Employer’s

Representative as described in the Contract, or financial interest in the Contract except for payment

for services on the Board;

(b) shall not previously have been employed as a consultant or otherwise by either of the Parties or the

Employer’s Representative except in those circumstances which have been disclosed in writing to

the Parties prior to this appointment;

(c) shall have disclosed in writing to the Parties and to the other members of the Board prior to this

appointment any professional or personal relationships with any director, officer or employee of

the Parties or the Employees Representative, and any prior involvement in the Project;

(d) shall not while a Board Member be employed as a consultant or otherwise by either of the Parties

or the Employer’s Representative without the prior written consent of the Parties and the other

members of the Board;

(e) shall not give advice to either of the Parties or to the Employees Representative concerning the

conduct of the Project other than in accordance with the Procedural Rules annexed hereto as

Appendix A (“the Rules”);

(f) shall not while a Board Member [unless the Parties shall otherwise agree in writing] enter into

discussions or make any agreement with either of the Parties or the Employer’s Representativeregarding employment by any of them whether as a consultant or otherwise after ceasing to b a

Board Member.



b

4. The Board Member shall

(a) be experienced in the type of work involved in the Project and the interpretation of the contract

documents and shall be fluent in the language of the Contract;

(b) ensure his availability for all site visits and hearings as are necessary and shall observe the

provisions of the Rules;

(c) become conversant with the Contract and the progress of the Project by studying all documents

received which shall be maintained in a current working file;(d) treat the details of the Contract and all activities and hearings of the Board as private and

confidential and shall not publish or disclose the same without the prior written consent of the

Parties;

(e) not assign delegate or subcontract any of the tasks under these Terms of Appointment or the Rules2;

(f) be available to give evidence and opinions in conjunction with other members of the Board on any

matter relevant to the Project not being a dispute when requested so to do by the Parties.

5. Neither the Employer, the Contractor or their respective Representatives shall seek advice from or

consultation with the Board Member regarding the Project otherwise than in the normal course of the

Board’s activities under the Contract and the Rules. The only exception to this prohibition shall be where

the Parties jointly agree to do so and the other Board Members also agree.

6. The Board Member will be paid as follows3:

(a) a retainer fee of [ ] per calendar month, which shall be considered as payment in full for:

i. being available on 28 days' notice for all site visits, bearings and Board meetings;

ii. becoming conversant with all Project developments and maintaining relevant files;

iii. all office and overhead expenses such as secretarial services, photocopying and office

supplies incurred in connection with his duties;

iv. all services performed hereunder except those referred to in Sub-Clause (c) below.

Beginning with the month following that in which the Taking-Over Certificate referred to in Clause 10 of

the Conditions (or if there is more than one, the one last issued) has been issued, the Board Member shall

receive[only one third of the monthly retainer feel. [Beginning with the next month after expiry of theContract Period as defined in the Conditions the Board Member shall no longer receive a monthly

retainer feel];

(b) a daily fee of [ ] which shall be considered as payment in full for:

i. each day or part of a day up to a maximum of two days travel time in each direction for the

journey between the Board Member’s home and the site or other location of a Board

meeting;

ii. each working day on site visits, hearings or Board meetings;

iii. each day spent reading the Parties' submissions in preparation for a bearing.

(c) cost of telephone calls, courier charges, faxes and telexes incurred in connection with his duties; all

reasonable and necessary travel expenses including [less than] first class air fare, subsistence andother direct travel expenses. These costs shall be reimbursed in the same currency as that in which

fees are payable. Receipts shall be required for all expenses in excess of [ ] percent of the daily fee

referred to in Sub-Clause (b) above;

(d) any taxes properly levied in the country of the site on payments made to the Board Member (unless

a national or permanent resident of the country of the site) pursuant to this Clause 6. Such

reimbursement will be in the same currency as that in which the fees are payable.

The retainer and fees shall remain fixed for the [initial] period of tenure of the Board Member [of twelve

months]. [Thereafter they shall be adjusted by agreement between the Parties and the Board Member at

each anniversary of the execution of these Terms of Appointment].

Payments to the Board Member shall be shared equally by the Employer and the Contractor. The BoardMember shall submit invoices for payment of the monthly retainer quarterly in advance. Invoices for

daily fees and expenses shall be submitted following the conclusion of a site visit or hearing. All invoices



c

shall be accompanied by a brief description of activities performed during the relevant period and

addressed as to 50 percent thereof to the Contractor and 50 percent thereof to the Employer. The Parties

will discharge invoices addressed to them within [28] calendar days after receipt.

7. The Parties may jointly terminate the Board Member’s appointment hereunder by reasonable notice in

writing. Such termination shall be without prejudice to any accrued rights of either of the Parties or the

Board Member.

8. The Parties undertake to each other and to the Board Member that the Board Member shall in no

circumstances:

(a) be called as a witness to give evidence concerning any dispute before an arbitrator appointed under

the Conditions;

(b) be liable for any claims for breach of duty, breach of contract or professional negligence arising out

of this appointment other than for the consequences of fraud or dishonesty.

The Parties hereby jointly and severally indemnify the Board Member against all or any such claims.

9. If the Board Member shall breach any of the provisions of Clause 3 he shall not be entitled to any fees or

expenses hereunder and shall reimburse each of the Employer and the Contractor for any fees and

expenses properly paid to him and to any other Board Member if as a consequence of such breach any

proceedings or decisions of the Board am rendered void or ineffective.

10. The law of these Terms of Appointment shall be the law of [ ].

11. Any dispute or claim arising out of or in connection with these Terms of Appointment or the breach,

termination or invalidity thereof, shall be settled by arbitration in accordance with the Rules of the

International Chamber of Commerce in force at the date hereof The Parties and the Board Member agree

to comply with the awards resulting from arbitration and waive their rights to any form of appeal insofar

as such waiver can validly be made.

SIGNED by ……………….. for

and on behalf of the Employer in the

presence of


and on behalf of the Contractor in

the presence of

SIGNED by ……………….. the

Board Member in the presence of

Witness: ………………...…………

Name: ………………………….….

Address ……………………………

Date: …………………………...…..

Witness: …………………………..

Name: ………………………….…

Address: ……………………….…

Date: ……………………………...

Witness: …………………………

Name: ……………………………

Address: …………………………

Date: ………………………….....



d

APPENDIX A

PROCEDURAL RULES OF THE DISPUTE ADJUDICATION BOARD (OF THREE MEMBERS)

1. The Board shall visit the site at regular intervals [and/or at times of critical construction events] at the

request of either the Employer or the Contractor, and in any event not less than [three] times in any

twelve month period.

2. The timing of and agendas for site visits shall be as agreed jointly by the Board the Employer and the

Contractor or in the absence of agreement shall be decided by the Board.

3. Site visits are to enable the Board to become acquainted with the progress of the Project and of any actual

or potential problems or claims.

Site visits shall be attended by the Employer, the Contractor and the Employer’s Representative and shall

be co-ordinated by the Employer in co-operation with the Contractor. The Employer shall ensure the

provision of appropriate conference facilities and secretarial and copying services.

At the conclusion of each site visit and before leaving the site the Board shall prepare a report on its

activities during the visit and shall send copies to those parties who attended.

4. The Employer and the Contractor shall promptly provide the Board with sufficient copies of any

documentation and information relevant to the Project that it may request.

5. If any dispute is referred to the Board in accordance with Sub-Clause 20.4 of the Conditions the Board

shall proceed as described therein. The Board may in its discretion decide to conduct a hearing on the

dispute in which event it will decide on the date and place for the hearing and may request that written

documentation and arguments from the Employer and the Contractor be presented to it prior to or at the

hearing.

The Board shall act as a Board of impartial experts, not arbitrators, and shall have full authority to

conduct any hearing as it thinks fit, not being bound by any rules or procedures other than those set out

herein. [Without limiting the foregoing it shall have power to adopt an inquisitorial procedure, to refuseadmission to hearings or audience at hearings to any persons other than the Employer the Contractor and

their respective Representatives and to proceed in the absence of any party who the Board is satisfied

received notice of the hearing].

The Board shall not express any opinions during any hearing concerning the merits of any arguments

advanced by the parties. After a bearing is concluded the Board shall convene in private to formulate its

decision.

[If a member fails to attend a meeting or hearing, or to fulfil any required function, the other two

members may nevertheless proceed and make decisions unless the absent member is the chairman and

instructs the other two members not to proceed, or the Parties otherwise agree].

6. The Board shall submit its decision in writing to the Employer and the Contractor in accordance with

Sub-Clause 20.4 of the Conditions or as otherwise agreed by the Employer and the Contractor in writing.

The Board shall endeavour to reach decisions unanimously, but if this is impossible decisions shall be by

a majority and the minority member shall prepare a written report for submission to the Employer, the

Employer’s Representative and the Contractor.

7. All communications between either of the Parties and a Board Member and all hearings shall be in the [ ]

language. All such communications shall be copied to the other Party and to other members of the Board

and shall comply with the provisions of Sub-Clause 1.8 of the Conditions.



e

TERMS OF APPOINTMENT FOR A BOARD OF ONE MEMBER 1

THESE TERMS OF APPOINTMENT OF THE BOARD MEMBER ARE MADE BETWEEN:


(2) [name of Contractor] of [address of Contractor] (hereinafter called “the Contractor”)

(3) [name of Board Member] of [address of Board Member] (hereinafter called “the Board Member”)

WHEREAS

A. The Employer and the Contractor (hereinafter jointly referred to as "the Parties") have on the day of

200[ ] Date: entered into a Contract (hereinafter called “the Contract”) for the execution of [ ]

(hereinafter called “the Project”).

B. By Sub-Clause 20.3 of the Conditions of Contract (hereinafter called “the Conditions”) provision is made

for the constitution of a Dispute Adjudication Board (hereinafter called “the Board”) which shall

comprise one suitably qualified person as stated in the Appendix to Tender.

C. The Board Member has agreed to serve as the sole member of the Board on the terms set out herein.


1. The Board Member

(1) hereby accepts this appointment to the Board which is a personal appointment and agrees to be

bound by these Terms of Appointment and Sub-Clauses 20.3 and 20.4 of the Conditions as if they

were set out herein;




the Parties and the Board Member shall have executed terms of appointment.


continuing duty to disclose in writing to each of them any fact or circumstance which might be such as to

call into question his impartiality or independence.






Employees Representative except in those circumstances which have been disclosed in writing to


(c) shall have disclosed in writing to the Parties prior to this appointment any professional or personal

relationships with any director, officer or employee of the Parties or the Employees Representative,

and any prior involvement in the Project;

(d) shall not while a Board Member be employed as a consultant or otherwise by either of the Partiesor the Employees Representative without the prior written consent of the Parties;



f





discussions or make any agreement with either of the Parties or the Employer’s Representative

regarding employment by any of them whether as a consultant or otherwise after ceasing to be a

Board Member.




(b) ensure his availability for all site visits and bearings and shall observe the provisions of the Rules;


received which shall be maintained in a current working file;

(d) treat the details of the Contract and all activities and hearings of the Board as private and


Parties;

(e) not assign delegate or subcontract any of the tasks under these Terms of Appointment or the Rules

(f) be available to give evidence and opinions on any matter relevant to the Project not being a dispute

when requested so to do by the Parties.



Board’s activities under the Contract and the Rules. The only exception to this prohibition shall be

where the Parties jointly agree to do so.

6. The Board Member will be paid as follows:(a) a retainer fee of [ ] per calendar month, which shall be considered as payment in full for:

i. being available on 28 days' notice for all site visits and hearings:

ii. becoming conversant with all Project developments and maintaining relevant files:

iii. all office and overhead expenses such as secretarial services. photocopying and office





receive [only one third of the monthly retainer feel. [Beginning with the next month after expiry of the

Contract Period as defined in the Conditions the Board Member shall no longer receive a monthlyretainer fee];



journey between the Board Member’s home and the site;

ii. each working day on site visits or hearings;

iii. each day spent reading the Parties’ submissions in preparation for a bearing;


reasonable and necessary travel expenses including [less than] first class air fare, subsistence and other direct

travel expenses. These costs shall be reimbursed in the same currency as that in which fees are payable.

Receipts shall be required for all expenses in excess of percent of the daily fee referred to in Sub-Clause (b)

above;



g

(d) any taxes properly levied in the country of the site on payments made to the Board Member (unlessa national or permanent resident of the country of the site) pursuant to this Clause 6. Suchreimbursement will be in the same currency as that in which the fees are payable.








will discharge invoices addressed to them within [28]calendar days after receipt.



Board Member.

8. The Parties undertake to each other and to the Board Member that the Board Member shall in nocircumstances:


the Conditions;






expenses previously paid to him if as a consequence of such breach any proceedings or decisions of theBoard are rendered void or ineffective.




International Chamber of Commerce in force at the date hereof. The Parties and the Board Member agree





presence of



the presence of



Witness: ………………...…………

Name: ………………………….….

Address ……………………………

Date: ………………………….…...

Witness: …………………………..

Name: ………………………….…

Address: ……………………….…

Date: ……………………………...

Witness: …………………..…..…

Name: ……………………………

Address: …………………………

Date: ………………………….....



h

APPENDIX A

PROCEDURAL RULES OF THE DISPUTE ADJUDICATION BOARD (OF ONE MEMBER)






3. Site visits are to enable the Board to become acquainted with the progress of the Project and of any

actual or potential problems or claims.












hearing.

The Board shall act as an impartial expert, not as an arbitrator, and shall have full authority to conduct

any hearing as it thinks fit, not being bound by any rules or procedures other than those set out herein.

[Without limiting the foregoing it shall have power to adopt an inquisitorial procedure, to refuseadmission to hearings or audience at hearings to any persons other than the Employer the Contractor and


received notice of the bearing].


advanced by the parties. After a hearing is concluded the Board shall formulate its decision.



7. All communications between either of the Parties and the Board Member and all hearings shall be in the

language. All such communications shall be copied to the other Party and shall comply with the

provisions of Sub-Clause 1.8 of the Conditions.

__________________________________________________________________________________________

1 Various clauses of these Terms and Rules contain words in brackets. The signatories should consider whether

or not these are appropriate in the circumstances of their Project or require amendment.

2 Circumstances may arise when the Board considers it needs specialist advice in order to fulfil its duties to the

Parties. These Terms do not empower the Board to take such advice at the Parties’ expense. It is recommended

that in such a situation the Board invite the Parties to agree to secure such advice at their own expense if they

accept it is necessary or desirable.

3 It is preferable to agree identical fees for the three Board Members, with the possible exception of the

chairman.




CONDITIONS OF CONTRACTFOR DESIGN – BUILD

AND TURNKEY

PART II GUIDANCE FOR THE PREPARATION OF

CONDITIONS OF PARTICULAR APPLICATION

FORMS OF TENDER AND AGREEMENT AND FIDIC MODEL TERMS

FOR THE APPOINTMENT OF A DISPUTE ADJUDICATION BOARD

FIRST EDITION 1995

ISBN 2-88432-010-5



a

CONDITIONS OF CONTRACT FOR DESIGN-BUILD AND TURNKEY

FIDIC MODEL TERMS OF APPOINTMENT FOR A DISPUTE ADJUDICATION BOARD

TERMS OF APPOINTMENT FOR A BOARD OF THREE MEMBERS1

THESE TERMS OF APPOINTMENT OF A BOARD MEMBER ARE MADE BETWEEN:


(2) [name of Contractor] of [address of Contractor] (hereinafter called “the Contractor”)(3) [name of Board Member] of [address of Board Member] (hereinafter called “the Board Member”)

WHEREAS

A. The Employer and the Contractor (hereinafter jointly referred to as “the Parties”) have on the [ ] day of

2000[ ] entered into a Contract (hereinafter called “the Contract”) for the execution of [ ] (hereinafter

called “the Project”).

B. By Sub-Clause 20.3 of the Conditions of Contract (hereinafter called “the Conditions”) provision is

made for the constitution of a Dispute Adjudication Board (hereinafter called “the Board”) which shall

comprise three suitably qualified persons as stated in the Appendix to Tender.

C. The Board Member has agreed to serve as [one of the members of) [chairman of] the Board on theterms set out herein.


1. The Board Member

(1) hereby accept this appointment to the Board which is a personal appointment and agrees to be bound by

these Terms of Appointment and Sub-Clauses 20.3 and 20.4 of the Conditions as if they were set out

herein;




the Parties and the last of the three members of the Board have executed terms of appointment.


continuing duty to disclose in writing to each of them and to the other members of the Board any fact or

circumstance which might be such as to call into question his impartiality or independence.






Employer’s Representative except in those circumstances which have been disclosed in writing to


(c) shall have disclosed in writing to the Parties and to the other members of the Board prior to this

appointment any professional or personal relationships with any director, officer or employee of

the Parties or the Employees Representative, and any prior involvement in the Project;

(d) shall not while a Board Member be employed as a consultant or otherwise by either of the Parties

or the Employer’s Representative without the prior written consent of the Parties and the other

members of the Board;





discussions or make any agreement with either of the Parties or the Employer’s Representativeregarding employment by any of them whether as a consultant or otherwise after ceasing to b a

Board Member.



b




(b) ensure his availability for all site visits and hearings as are necessary and shall observe the

provisions of the Rules;


received which shall be maintained in a current working file;(d) treat the details of the Contract and all activities and hearings of the Board as private and


Parties;

(e) not assign delegate or subcontract any of the tasks under these Terms of Appointment or the Rules2;

(f) be available to give evidence and opinions in conjunction with other members of the Board on any

matter relevant to the Project not being a dispute when requested so to do by the Parties.



Board’s activities under the Contract and the Rules. The only exception to this prohibition shall be where

the Parties jointly agree to do so and the other Board Members also agree.

6. The Board Member will be paid as follows3:

(a) a retainer fee of [ ] per calendar month, which shall be considered as payment in full for:

i. being available on 28 days' notice for all site visits, bearings and Board meetings;

ii. becoming conversant with all Project developments and maintaining relevant files;

iii. all office and overhead expenses such as secretarial services, photocopying and office





receive[only one third of the monthly retainer feel. [Beginning with the next month after expiry of theContract Period as defined in the Conditions the Board Member shall no longer receive a monthly

retainer feel];



journey between the Board Member’s home and the site or other location of a Board

meeting;

ii. each working day on site visits, hearings or Board meetings;

iii. each day spent reading the Parties' submissions in preparation for a bearing.


reasonable and necessary travel expenses including [less than] first class air fare, subsistence andother direct travel expenses. These costs shall be reimbursed in the same currency as that in which

fees are payable. Receipts shall be required for all expenses in excess of [ ] percent of the daily fee

referred to in Sub-Clause (b) above;

(d) any taxes properly levied in the country of the site on payments made to the Board Member (unless

a national or permanent resident of the country of the site) pursuant to this Clause 6. Such

reimbursement will be in the same currency as that in which the fees are payable.








c



will discharge invoices addressed to them within [28] calendar days after receipt.



Board Member.

8. The Parties undertake to each other and to the Board Member that the Board Member shall in no

circumstances:


the Conditions;






expenses properly paid to him and to any other Board Member if as a consequence of such breach any

proceedings or decisions of the Board am rendered void or ineffective.




International Chamber of Commerce in force at the date hereof The Parties and the Board Member agree





presence of



the presence of



Witness: ………………...…………

Name: ………………………….….

Address ……………………………

Date: …………………………...…..

Witness: …………………………..

Name: ………………………….…

Address: ……………………….…

Date: ……………………………...

Witness: …………………………

Name: ……………………………

Address: …………………………

Date: ………………………….....



d

APPENDIX A

PROCEDURAL RULES OF THE DISPUTE ADJUDICATION BOARD (OF THREE MEMBERS)






3. Site visits are to enable the Board to become acquainted with the progress of the Project and of any actual

or potential problems or claims.












hearing.

The Board shall act as a Board of impartial experts, not arbitrators, and shall have full authority to

conduct any hearing as it thinks fit, not being bound by any rules or procedures other than those set out

herein. [Without limiting the foregoing it shall have power to adopt an inquisitorial procedure, to refuseadmission to hearings or audience at hearings to any persons other than the Employer the Contractor and


received notice of the hearing].


advanced by the parties. After a bearing is concluded the Board shall convene in private to formulate its

decision.

[If a member fails to attend a meeting or hearing, or to fulfil any required function, the other two

members may nevertheless proceed and make decisions unless the absent member is the chairman and

instructs the other two members not to proceed, or the Parties otherwise agree].



The Board shall endeavour to reach decisions unanimously, but if this is impossible decisions shall be by

a majority and the minority member shall prepare a written report for submission to the Employer, the

Employer’s Representative and the Contractor.

7. All communications between either of the Parties and a Board Member and all hearings shall be in the [ ]

language. All such communications shall be copied to the other Party and to other members of the Board

and shall comply with the provisions of Sub-Clause 1.8 of the Conditions.



e

TERMS OF APPOINTMENT FOR A BOARD OF ONE MEMBER 1

THESE TERMS OF APPOINTMENT OF THE BOARD MEMBER ARE MADE BETWEEN:


(2) [name of Contractor] of [address of Contractor] (hereinafter called “the Contractor”)

(3) [name of Board Member] of [address of Board Member] (hereinafter called “the Board Member”)

WHEREAS

A. The Employer and the Contractor (hereinafter jointly referred to as "the Parties") have on the day of

200[ ] Date: entered into a Contract (hereinafter called “the Contract”) for the execution of [ ]

(hereinafter called “the Project”).

B. By Sub-Clause 20.3 of the Conditions of Contract (hereinafter called “the Conditions”) provision is made

for the constitution of a Dispute Adjudication Board (hereinafter called “the Board”) which shall

comprise one suitably qualified person as stated in the Appendix to Tender.

C. The Board Member has agreed to serve as the sole member of the Board on the terms set out herein.


1. The Board Member

(1) hereby accepts this appointment to the Board which is a personal appointment and agrees to be

bound by these Terms of Appointment and Sub-Clauses 20.3 and 20.4 of the Conditions as if they

were set out herein;




the Parties and the Board Member shall have executed terms of appointment.


continuing duty to disclose in writing to each of them any fact or circumstance which might be such as to

call into question his impartiality or independence.






Employees Representative except in those circumstances which have been disclosed in writing to


(c) shall have disclosed in writing to the Parties prior to this appointment any professional or personal

relationships with any director, officer or employee of the Parties or the Employees Representative,

and any prior involvement in the Project;

(d) shall not while a Board Member be employed as a consultant or otherwise by either of the Partiesor the Employees Representative without the prior written consent of the Parties;



f





discussions or make any agreement with either of the Parties or the Employer’s Representative

regarding employment by any of them whether as a consultant or otherwise after ceasing to be a

Board Member.




(b) ensure his availability for all site visits and bearings and shall observe the provisions of the Rules;


received which shall be maintained in a current working file;

(d) treat the details of the Contract and all activities and hearings of the Board as private and


Parties;

(e) not assign delegate or subcontract any of the tasks under these Terms of Appointment or the Rules

(f) be available to give evidence and opinions on any matter relevant to the Project not being a dispute

when requested so to do by the Parties.



Board’s activities under the Contract and the Rules. The only exception to this prohibition shall be

where the Parties jointly agree to do so.

6. The Board Member will be paid as follows:(a) a retainer fee of [ ] per calendar month, which shall be considered as payment in full for:

i. being available on 28 days' notice for all site visits and hearings:

ii. becoming conversant with all Project developments and maintaining relevant files:

iii. all office and overhead expenses such as secretarial services. photocopying and office





receive [only one third of the monthly retainer feel. [Beginning with the next month after expiry of the

Contract Period as defined in the Conditions the Board Member shall no longer receive a monthlyretainer fee];



journey between the Board Member’s home and the site;

ii. each working day on site visits or hearings;

iii. each day spent reading the Parties’ submissions in preparation for a bearing;


reasonable and necessary travel expenses including [less than] first class air fare, subsistence and other direct

travel expenses. These costs shall be reimbursed in the same currency as that in which fees are payable.

Receipts shall be required for all expenses in excess of percent of the daily fee referred to in Sub-Clause (b)

above;



g

(d) any taxes properly levied in the country of the site on payments made to the Board Member (unlessa national or permanent resident of the country of the site) pursuant to this Clause 6. Suchreimbursement will be in the same currency as that in which the fees are payable.








will discharge invoices addressed to them within [28]calendar days after receipt.



Board Member.

8. The Parties undertake to each other and to the Board Member that the Board Member shall in nocircumstances:


the Conditions;






expenses previously paid to him if as a consequence of such breach any proceedings or decisions of theBoard are rendered void or ineffective.




International Chamber of Commerce in force at the date hereof. The Parties and the Board Member agree





presence of



the presence of



Witness: ………………...…………

Name: ………………………….….

Address ……………………………

Date: ………………………….…...

Witness: …………………………..

Name: ………………………….…

Address: ……………………….…

Date: ……………………………...

Witness: …………………..…..…

Name: ……………………………

Address: …………………………

Date: ………………………….....



h

APPENDIX A

PROCEDURAL RULES OF THE DISPUTE ADJUDICATION BOARD (OF ONE MEMBER)






3. Site visits are to enable the Board to become acquainted with the progress of the Project and of any

actual or potential problems or claims.












hearing.

The Board shall act as an impartial expert, not as an arbitrator, and shall have full authority to conduct

any hearing as it thinks fit, not being bound by any rules or procedures other than those set out herein.

[Without limiting the foregoing it shall have power to adopt an inquisitorial procedure, to refuseadmission to hearings or audience at hearings to any persons other than the Employer the Contractor and


received notice of the bearing].


advanced by the parties. After a hearing is concluded the Board shall formulate its decision.



7. All communications between either of the Parties and the Board Member and all hearings shall be in the

language. All such communications shall be copied to the other Party and shall comply with the

provisions of Sub-Clause 1.8 of the Conditions.

__________________________________________________________________________________________

1 Various clauses of these Terms and Rules contain words in brackets. The signatories should consider whether

or not these are appropriate in the circumstances of their Project or require amendment.

2 Circumstances may arise when the Board considers it needs specialist advice in order to fulfil its duties to the

Parties. These Terms do not empower the Board to take such advice at the Parties’ expense. It is recommended

that in such a situation the Board invite the Parties to agree to secure such advice at their own expense if they

accept it is necessary or desirable.

3 It is preferable to agree identical fees for the three Board Members, with the possible exception of the

chairman.



1

CONTENTS

INTRODUCTION ................................................................................................................... 2

1 THE CONTRACT .................................................................................................... 3

2 THE EMPLOYER .................................................................................................... 53 THE EMPLOYER’S REPRESENTATIVE .............................................................. 5

4 THE CONTRACTOR ............................................................................................... 6

5 DESIGN ................................................................................................................... 9

6 STAFF AND LABOUR .......................................................................................... 10

7 PLANT, MATERIALS AND WORKMANSHIP .................................................... 11

8 COMMENCEMENT, DELAYS AND SUSPENSION ........................................... 12

9 TEST ON COMPLETION ...................................................................................... 12

10 EMPLOYER’S TAKING OVER ............................................................................ 1311 TEST AFTER COMPLETION ............................................................................... 13

12 DEFECTS LIABILITY .......................................................................................... 13

13 CONTRACT PRICE AND PAYMENT .................................................................. 14

14 VARIATIONS ........................................................................................................ 22

15 DEFAULT OF CONTRACTOR ............................................................................. 23

16 DEFAULT OF EMPLOYER .................................................................................. 23

17 RISK AND RESPONSABILITY ............................................................................ 23

18 INSURANCES ....................................................................................................... 23

19 FORCE MAJEURE ................................................................................................ 25

20 CLAIMS, DISPUTES AND ARBITRATION’ ....................................................... 25

ANNEXES - FORMS OF SECURITY ................................................................................. 27

Annex A: EXAMPLE FORM OF PERFORMANCE GUARANTEE ................................... 27

Annex B: EXAMPLE FORM OF SURETY BOND FOR PERFORMANCE ................................. 28

Annex C: EXAMPLE FORM OF GUARANTEE FOR ADVANCE PAYMENT ........................... 29



2

INTRODUCTION

The terms of the Conditions of Contract for Design-Build and Turnkey have been prepared by the Fédération

Intemationale des Ingénieurs-Conseils (FIDIC) and are recommended for general use for the purpose of the

design and construction of works where tenders are invited on an international basis; with minor modifications,

the Conditions are also suitable for use on domestic contracts. Under the usual arrangements for a design-build

contract, the Contractor is responsible for the design and provision, in accordance with the Employer’srequirements, of works which may include any combination of engineering (including civil, mechanical,

electrical, etc) and building works; and interim payments are made as construction proceeds.

The Conditions are also intended for use on turnkey contracts, under which the Employer’s requirements usually

include provision of a fully-equipped facility, ready for operation (at the turn of the “key”); such contracts are

often contractor-financed.

The version in English of the Conditions is considered by FIDIC as the official and authentic text for the

purposes of translation.

In the preparation of the Conditions it was recognised that, while there are many sub-clauses which will be

generally applicable, there are some sub-clauses which must necessarily vary to take account of the

circumstances relevant to the particular contract. The sub-clauses which were considered to be applicable tothe majority of contracts have been presented in Part I - General Conditions, which will facilitate their

incorporation into the contract. Part I - General Conditions and Part II - Conditions of Particular Application

will together comprise the Conditions governing the rights and obligations of the parties. It will be necessary

to prepare the Part II for each individual contract, taking particular account of the references to Part II which

are contained in some sub-clauses in Part I.

Part I - General Conditions was prepared on the following basis:

(i) interim payments will be made as construction proceeds: example wording for contractor-financed

contracts is proposed in this Part II;(ii) if the wording in Part I necessitates further information, the sub-clause makes reference to that information

being contained in the Appendix to Tender: either prescribed by the Employer or inserted by the Tenderer;

(iii) if a sub-clause in Part I concerns a matter on which different terms could apply on different contracts, the principles applied in writing the sub-clause were:(a) users would find it more convenient to delete (or not invoke) provisions which they did not want to

apply, than to write additional text (in Part II) if Part I did not cover their requirements; or

(b) in cases where the application of (a) was thought to be inappropriate, the sub-clause contains the

provisions which were considered to apply to the option most often used.

It should be noted that, because of the application of (a), some of the provisions contained in Part I should not

be taken to be the recommended provisions for an apparently-typical contract. The Conditions of Contract must

be prepared for each tender document individually, by personnel with the relevant skills.

The guidance hereafter is intended to assist writers of Part II by giving options for various sub-clauses where

appropriate. As far as possible, example wording is included, in italics; in some cases, however, only an aide-

memoire is given. Before incorporating any example wording, it must be checked to ensure that it is wholly

suitable for the particular circumstances; if not, it must be amended. Where example wording is amended, and

in all cases where other amendments or additions are made, care must be taken to ensure that no ambiguity is

created, either with Part I or between the clauses in Part II.

FIDIC have published a document entitled “Tendering Procedure” which presents a systematic approach to the

selection of tenderers and the obtaining and evaluation of tenders; the second edition was published in 1994.

The document is intended to assist the Employer to receive sound competitive tenders with a minimum of

qualifications. FIDIC also intend to publish a guide to the use of these Conditions of Contract for Design-Build

and Turnkey.



3

THE PREPARATION OF CONDITIONS OF PARTICULAR

APPLICATION

Clause 1 - The Contract

THE CONTRACTThe tender documents should be prepared on behalf of the Employer by suitably-qualified engineers who arefamiliar with his requirements and with the technical aspects of the required works. The tender documents

issued to tenderers will consist of the Conditions of Contract, the Employer’s Requirements, and the Tender

and Schedules for completion by the Tenderer. In addition, each of the Tenderers should receive the data

referred to in Sub-Clause 4.9, and the Instructions to Tenderers to advise them of any matters which the

Employer wishes them to include in their Proposal but which do not form part of the Employer’s Requirements

for the Works. When the Employer accepts the Tender, the Contract (which then becomes effective) includes

such Proposal and the completed Schedules.

The Employer’s Requirements should specify the particular requirements for the completed Works, including

quality and scope, and may require the Contractor to train personnel and/or to supply certain items, such as

consumables which could be listed in a Schedule. The matters referred to in some or all of the following Sub-Clauses might be included:

1.9 Number of copies (and required extent) of Construction Documents

4.4 Other contractors (and others) on the Site

4.7 Setting-out points, lines and levels of reference

4.14 Periods for any specified submissions, approvals and consents

4.18 Environmental constraints

4.19 Electricity, water, gas and other services available on the Site

4.20 Employer supplied machinery and materials

5.1 Criteria for design personnel

5.2 Extent, and procedures for submission and pre-construction review, of Construction Documents5.4 Technical standards and building regulations

5.5 Extent, and procedures for submission and pre-construction review, of samples

5.6 As-built drawings and other records of the Works

5.7 Operation and maintenance manuals

6.6 Facilities for the Employer’s and Employer’s Representative’s personnel

7.1 Manner of execution

7.4 Testing during manufacture and/or construction

9.1 Tests on Completion

11.1 Tests after Completion

14.5 Provisional Sums

The Appendix to Tender, based on the example form herein, should be prepared by the Employer, with the

elements completed to the extent of his requirements. The Employer may also be able to anticipate the data

he requires from Tenderers, and include a questionnaire in the Schedules.

The Instructions to Tenderers may need to specify any constraints on the completion of the Appendix to Tenderand/or Schedules, and/or to specify the extent of other information which the Tenderer is to include with his

Tender. The matters referred to in some or all of the following Sub-Clauses might be included:



4

4.3 Contractor’s Representative (name and curriculum vitae)

4.8 Quality Assurance system

4.14 Programming system (precedence networking techniques)

7.4 Testing during manufacture and/or construction

9.1 Tests on Completion

11.1 Tests after Completion

18 Insurances20 Resolution of disputes

Turnkey contracts typically include design, construction, fixtures, fittings and equipment (f.f.e.), the scope of

which should be defined in the Employer’s Requirements. Full consideration should be given to detailed

requirements, such as the extent to which the Works are to be fully equipped, ready for operation, with spare

parts and consumables provided for a stated period's operation by the Employer. In addition, the Contractor

may be required to operate the Works, either for a few months' commissioning period, or for some years’

operation on a build-operate-transfer contract.

Understandably, tenderers are often reluctant, in the face of extensive competition, to incur great expense in

the preparation of tender designs. When preparing the Instructions to Tenderers, thought should be given as tothe extent of detail which tenderers can realistically be expected to prepare and include in their Proposals.

Consideration should be given to offering some remuneration to tenderers if they, in order to provide a

responsive tender, have to undertake studies or carry out design work of a conceptual nature.

Sub-Clause 1.1 - Definitions

It may be necessary to amend some of the definitions; for example:

1.1.3.1 the Base Date could be defined as a particular calendar date

1.1.3.5 a period other than a year may be required, for remedying any defects

1.1.5.2 a different currency may be required to be the contract Local Currency

1.1.5.3 payments in a Foreign Currency may not be acceptable

1.1.6.11 all parts of a cross-border Site may not be located in the same Country

Sub-Clause 1.5 - Contract Agreement

The form of Agreement should be included in the tender documents as an annex to Part II. If tender

negotiations have been lengthy, it may be considered advisable for the Agreement to include definitions of the

details of the Contract Price and/or of the dates defined in Sub-Clause 1.1.3. The parties should ascertain

whether the law necessitates an Agreement.

Sub-Clause 1.6 - Priority of Documents

An order of precedence is usually necessary, in case a conflict is subsequently found among the contract

documents. If no order of precedence is to be prescribed, this Sub-Clause may be varied:

EXAMPLE

Delete the text of Sub-Clause 1.6 and substitute:

The several documents forming the Contract are to be taken as mutually explanatory of one another. In

the case of ambiguities or discrepancies, the priority shall be that accorded by law. The Employer’s

Representative has authority to issue any instruction which he considers necessary in explanation of such

ambiguities or discrepancies.



5

Sub-Clause 1. 10 - Employer’s Use of Contractor’s Documents

Additional provisions may be required, if all rights to particular items of computer software (for example) are

to be assigned to the Employer. The wording of such provisions should take account of the applicable law.

Sub-Clause 1.14 - Joint and Several Liability

For a major turnkey contract, detailed requirements for the joint venture may need to be specified; for example,

it may be desirable for each member to produce a parent company guarantee. Requirements which apply prior

to the Contract becoming effective should be included in the Instructions to Tenderers. The Employer will wishthe leader of the joint venture to be appointed at an early stage, providing a single point of contact thereafter,

and will not wish to be involved in a dispute between the members of a joint venture. The Employer should

scrutinise the joint venture agreement carefully, and it may need to be approved by the project's financing

institutions. It may be necessary to review the effect of this Sub-Clause in relation to the particular legal

personality which the applicable law may give to joint ventures.

Additional Sub-Clause - Details to be Confidential

If confidentiality is required, an additional sub-clause may be added:

EXAMPLE SUB-CLAUSE

The Contractor shall treat the details of the Contract as private and confidential, except to the extentnecessary to carry out his obligations under it. The Contractor shall not publish, permit to be published,

or disclose any particulars of the Contract in any trade or technical paper or elsewhere without the

previous consent in writing of the Employer and at the Employer’s sole discretion.

Clause 2 - The Employer

THE EMPLOYER Sub-Clause 2.2 - Access to and Possession of the Site

It may be essential for the Contractor to have early access to the Site for the purposes of survey and sub-surface

investigations. If right of access cannot be granted, both early and thereafter exclusively, details should begiven in the Employer’s Requirements.

Clause 3 - The Employer’s Representative

THE EMPLOYER’S REPRESENTATIVE

Sub-Clause 3.1 – Employer’s Representative’s Duties and Authority

Any requirements for Employer’s approval should be set out in Part II:

EXAMPLE

The Employer’s Representative shall obtain the specific approval of the Employer before taking action

under the following Sub-Clauses of the Conditions of Contract:

. (a) Sub-Clause.................... (insert number; describe action, unless all require approval)

(b) Sub-Clause ................... (insert number; describe action, unless all require approval)

This list should be extended or reduced as necessary. If the obligation to obtain the approval of the Employer

only applies beyond certain limits (monetary or otherwise), the example wording should be varied.



6

Additional Sub-Clause - Management Meetings

EXAMPLE SUB-CLAUSE

Either the Employer’s Representative or the Contractor's Representative may require the other to attend

a management meeting. The business of each management meeting shall be to review the anticipated

arrangements for future work and to resolve any matters raised in accordance with this Sub-Clause. The

Employer’s Representative shall record the business of management meetings and provide copies of this

record to those attending the meeting and to the Employer. The responsibility of the parties for any actions

to be taken shall be included in such record and shall, if not agreed in accordance with the Contract, be

decided by the Employer’s Representative.

The Contractor’s Representative shall notify the Employer’s Representative at the earliest opportunity of

specific likely future events or circumstances which may adversely affect the work, increase the Contract

Price or delay the execution of the Works. The Employer's Representative may require the Contractor to

submit an estimate of the anticipated effect of the future event or circumstances, and/or a proposal under

Sub-Clause 14.3. The Contractor shall submit such estimate and/or proposal as soon as practicable. The

Contractor’s Representative shall co-operate with the Employer’s Representative in making and

considering proposals to mitigate the effect of any such event or circumstances, and in carrying out

instructions of the Employer’s Representative.

Clause 4 - The Contractor

THE CONTRACTOR

Sub-Clause 4.1 - General Obligations

The Contractor is required to check the design criteria and calculations (if any) included in the Employer’s

Requirements. It may be necessary for an outline design to be prepared, prior to the preparation of the tender

documents, in order (for example) to establish the feasibility of the project. Tenderers should be advised of the

extent to which such design is a suggestion or a requirement. It may also be necessary to amend the second

sentence of the Tender so that the Tenderer not only checks the Employer’s design, but also takes on full

responsibility for it. Alternatively, a reasonable period (from the Commencement Date) could be specified for

the Contractor to check such design, after which he assumes full responsibility for it, subject to permittedexceptions.

Sub-Clause 4.2 - Performance Security

The acceptable form(s) of performance security should be included in the tender documents, annexed to Part II.

Example forms are annexed to this document as Annex A and Annex B; the alternative of an insolvency

guarantee may be considered appropriate in certain cases. These example forms and the wording of the Sub-

Clause may have to be amended to comply with the law applicable to the Contract.

EXAMPLE

After the second sentence of Sub-Clause 4.2, add:

If the performance security is in the form of a bank guarantee, it shall be issued either (a) by a bank located

in the Country, or (b) directly by a foreign bank acceptable to the Employer. If the performance security

is not in the form of a bank guarantee, it shall be furnished by an institution registered, or licensed to do

business, in the Country.

For a turnkey contract, the Contractor could alternatively be required to provide a performance bond

guaranteeing the due and proper completion of the Works, without specifying the amounts or currencies.



7

Sub-Clause 4.3 – Contractor’s Representative

If the Representative is known at the time of submission of the Tender, the Proposal can include the

Representative’s name; however, the Tenderer may wish to propose alternatives, especially if the contract award

seems likely to be delayed. If the ruling language is not the same as the language for day to day communications

(under Sub-Clause 1.4), or if for any other reason it is necessary to stipulate that the Contractor’s

Representatives shall be fluent in a particular language, one of the following sentences may be added.

EXAMPLE

At the end of Sub-Clause 4.3, add:

The Contractor’s Representative and such persons shall also be fluent in (insert name of language)

EXAMPLE


If the Contractor's Representative, or such persons, is not fluent in (insert name of language), the

Contractor shall make a competent interpreter available during all working hours.

Sub-Clause 4.4 - Co-ordination of the Works

If the Employer knows the particular requirements relating to the presence of other contractors, details should

be included in the Employer's Requirements. If the work is let under several separate contracts, it may beappropriate for the Employer's Requirements to specify that the Contractor shall be responsible for co-

ordinating his work with that of other contractors. However, if the Contractor is to have responsibility to co-

ordinate the work of other contractors, he should be given the power to do so in some effective way. It will

also be necessary for him to know in advance what he is going to co-ordinate, with whom and when.

Sub-Clause 4.5 - Subcontractors

The wording in Part I includes the conditions which will usually apply. If less (or no) consent is required, some

(or all) of sub-paragraphs (a) to (d) may be deleted, or qualified in Part II:

EXAMPLE

Prior consent shall not be required for minor details where the value of the subcontract is less than(amount to be stated; alternatively:) 0.01 % of the Contract Price.

A sentence may be added to increase the extent to which consent is required:

EXAMPLE

The prior consent of the Employer's Representative shall be obtained to the suppliers of the following

Materials: (insert details: for example, manufactured or prefabricated items)

Sub-Clause 4.6 - Assignment of Subcontractor’s Obligations

If the Contractor is required to assign his right to subsequently make a claim against the Subcontractor for

defective performance, it may be appropriate for the terms of the assignment to entitle the Contractor to requirethe Employer to make such claim on the Contractor’s behalf.

Sub-Clause 4.8 - Quality Assurance

The wording in Part I imposes the requirement of a quality assurance system in accordance with details stated

in the Contract (in Part II, the Employer’s Requirements or the Contractor’s Proposal). If no such system is

appropriate, this Sub-Clause may be deleted.



8

Sub-Clause 4.11 - Unforeseeable Sub-Surface Conditions

In the case of major sub-surface works, the allocation of the risk of sub-surface conditions is an aspect which

should be considered when tender documents are being prepared. If this risk is to be shared between the parties,

EXAMPLE

Delete sub-paragraph (b) of Sub-Clause 4.11 and substitute:

(b) the additional Cost due to such conditions . ...........per cent ( ............. %) of which shall be added to

the Contract Price (the balance ................... percent of such Cost shall be borne by the Contractor),

Sub-Clause 4.14 - Programme

The wording in I Part I specifies that the proframme uses precedence networking techniques. Which may not

be appropriate for some types of Works; for example, linear programmes (time-chainage charts) may be

preferable for tunnels. It may therefore be considered necessary to amend the Sub-Clause, and/or to specify

detailed electronic data-processing requirements.

Sub-Clause 4.16 - Contractor’s Equipment

Employer’s obligations should be specified (under Sub-Clause 4.20, for example). If vesting of Contractor’s

Equipment is required, further paragraphs may be added, subject to their being consistent with the applicablelaw:

EXAMPLE

At the end of Sub-Clause 4.16, add the following paragraphs:

Contractor’s Equipment which is owned by the Contractor (either directly or indirectly) shall be deemed

to be the properly of the Employer with effect from its time of arrival on the Site. The vesting of such

property in the Employer shall not:

(a) affect the responsibility or liability of the Employer,

(b) prejudice the right of the Contractor to the sole use of such Contractor’s Equipment for the purpose

of the Works, or

(c) affect the Contractor's responsibility to operate and maintain the same under the provisions of the

Contract.

The property in each item shall be deemed to revest in the Contractor with effect from the time he is entitled

to remove it from the Site, or when the Employer’s Representative issues the Taking-Over Certificate for

the Works, whichever occurs first.

Sub-Clause 4.17 - Safety Precautions

If the Contractor is sharing occupation of the Site with others, it may not be appropriate for him to provide

some of the listed items; in these circumstances, the Employer’s obligations should be specified.

Sub-Clause 4.19 - Electricity, Water and Gas

If services are to be available for the Contractor to use, the Employer’s Requirements should give details,

including locations and prices.



9

Sub-Clause 4.20 - Employer Supplied Machinery and Materials

For this Sub-Clause to apply, the Employer’s Requirements should describe each item which the Employer will

provide and/or operate and should specify all necessary details. With some types of facilities, further provisions

may be necessary, to clarify aspects such as liability and insurance.

Sub-Clause 4.22 - Security of the Site

If the Contractor is sharing occupation of the Site with others, it may not be appropriate for him to be

responsible for its security; in these circumstances, the Employer's obligations should be specified.

Clause 5 - Design

DESIGNSub-Clause 5.2 - Construction Documents

The “Construction Documents” include all drawings which are to be submitted by the Contractor for

Pre-construction review by the Employer’s Representative. The extent to which such Documents are required,

and the procedures for submission and review, may need to be clarified in the Employer’s Requirements. It

may be appropriate to specify different "review periods", taking account of the time necessary to review the

different types of drawing, and/or of the possibility of substantial submissions at particular stages of the design-

build process.

If the Employer’s Representative is to carry out a full approval procedure, it should be described in the

Employer’s Requirements, and full consideration should be given to aspects such as liability and the

consequences of delayed approval; the Sub-Clause may be amended:

EXAMPLE

In Sub-Clause 5.2, delete sub-paragraph (a) and substitute:

(a) construction shall not commence until the Contractor receives the Employer’s Representative’s

approval of the Construction Documents which are relevant to the design and construction of such

part;

Sub-Clause 5.9 - Patent Rights

If the Works involves the use by the Contractor of a design previously provided to the Employer by others, an

additional sub-clause may be required:

EXAMPLE SUB-CLAUSE

Employer’s Warranty for Patent Rights

If any matter, for which the Contractor is not liable to indemnify the Employer under Sub-Clause 5.9, causes

the infringement (or allegation of infringement) by the Contractor of any patent, registered design,

copyright, trade mark or other intellectual property right, the Employer shall indemnify the Contractor

against all claims, damages, charges and costs which the Contractor may incur.The Contractor shall promptly notify the Employer of any claim under this Sub-Clause. The Employer

may, at his own cost, conduct negotiations for the settlement of such claim, and any litigation or arbitration

that may arise from it. The Contractor shall not make any admission which might be prejudicial to the

Employer, unless the Employer has failed to take over the conduct of the negotiations or litigation within

a reasonable time after having been so requested. The Contractor shall, at the request and cost of the

Employer, assist him in contesting any such claim or action, and shall be repaid all reasonable costs

incurred.



10

Clause 6 - Staff and Labour

STAFF AND LABOUR Sub-Clause 6.5 - Working Hours

If the Employer does not wish to specify working hours in the Appendix to Tender, or to restrict them to the

times specified by the Tenderer (in order to plan the Employer’s Representative’s supervision, for example),

this Sub-Clause may be deleted.

Sub-Clause 6.6 - Facilities for Staff and Labour

If the Employer will make some accommodation available, his obligations should be specified.

Sub-Clause 6.8 - Contractor’s Superintendence

If the ruling language is not the same as the language for day to day communications (under Sub-Clause 1.4),

or if for any other reason it is necessary to stipulate that the Contractor's superintending staff shall be fluent in

a particular language, the following sentence may be added.

EXAMPLE


A reasonable proportion of the Contractor’s superintending staff shall have a working knowledge of (insert

name of language), or the Contractor shall have sufficient competent interpreters available on Site during

all working hours.

Additional Sub-Clauses

It may be necessary to add a few sub-clauses to take account of the circumstances and locality of the Site:

EXAMPLE SUB-CLAUSE

Foreign Staff and Labour

The Contractor may import such staff, artisans, and labourers as are .required in order to execute the

Works. The Contractor must ensure that all such staff and labour are provided with the required residence

visas and work permits. The Contractor shall be responsible for the return to the place where they were

recruited or to their domicile of all persons whom the Contractor recruited and employed for the purposes

of or in connection with the Contract. The Contractor shall be responsible for such persons as are to be

returned until they shall have left the Site or, in the case of foreign nationals who have been recruited

outside the Country, shall have left it.

EXAMPLE SUBCLAUSE

Measures against Insect and Pest Nuisance

The Contractor shall at all times take the necessary precautions to protect all staff and labour employed

on the Site from insect and pest nuisance, and to reduce the dangers to health and the general nuisance

occasioned by the same. The Contractor shall provide his staff and labour with suitable prophylactics forthe prevention of malaria and take steps to prevent the formation of stagnant pools of water. The

Contractor shall comply with all the regulations of the local health authorities and shall arrange to spray

thoroughly with approved insecticide all buildings erected on the Site. Such treatment shall be carried out

at least once a year or as instructed by such authorities.



11

EXAMPLE SUB-CLAUSE

Epidemics

In the event of any outbreak of illness of an epidemic nature, the Contractor shall comply with and carry

out such regulations, orders and requirements as may be made by the Government, or the local medical

or sanitary authorities, for the purpose of dealing with and overcoming the same.

EXAMPLE SUB-CLAUSE

Burial of the Dead

The Contractor shall make all necessary arrangements for the transport, to any place as required forburial, of any of his expatriate employees or members of their families who may die in the Country. The

Contractor shall also be responsible, to the extent required by local regulations, for making any

arrangements with regard to burial of any of his local employees who may die while engaged upon the

Works.

EXAMPLE SUB-CLAUSE Alcoholic Liquor or Drugs

The Contractor shall not, otherwise than in accordance with the statutes, ordinances and government

regulations or orders for the time being in force, import, sell, give, barter or otherwise dispose of any

alcoholic liquor or drugs, or permit or suffer any such importation, sale, gift, barter or disposal by his

Subcontractors, agents, staff or labour.

EXAMPLE SUB-CLAUSE

Arms and Ammunition

The Contractor shall not give, barter or otherwise dispose of to any person or persons, any arms or

ammunition of any kind or permit or suffer the same as aforesaid.

EXAMPLE SUB-CLAUSE

Festivals and Religious Customs

The Contractor shall in all dealings with his staff and labour have due regard to all recognised festivals,

days of rest and religious or other customs.

Clause 7 - Plant, Materials and Workmanship

PLANT, MATERIALS AND WORKMANSHIP

Additional Sub-Clause

If the Contract is being financed by an institution whose rules or policies require a restriction on the use of its

funds, a further sub-clause may be added:

EXAMPLE SUB-CLAUSE

All Contractor’s Equipment, Temporary Works, Plant and Materials shall have its origin in eligible source

countries as defined in (insert name of published guidelines for procurement). Contractor’s Equipment,

Temporary Works, Plant and Materials shall be transported by carriers from such eligible source

countries, unless exempted by the Employer’s Representative in writing on the basis of potential excessivecosts or delays. Surely, insurance and banking services shall be provided by insurers and bankers from

such eligible source countries.



12

Clause 8 - Commencement, Delays and Suspension

COMMENCEMENT, DELAYS AND SUSPENSIONSub-Clause 8.2 - Time for Completion

If the Works are to be taken-over in stages, these stages should be defined as Sections, in the Appendix to

Tender.

Sub-Clause 8.6 - Liquidated Damages for Delay

Under many legal systems, these pre-defined damages must be a reasonable pre-estimate of the Employer’s

probable loss in the event of delay. If the Contract Price is to be quoted as the sum of figures in more than one

currency, it may be preferable to define these damages (per day) as a percentage reduction applicable to each

of such figures. If the Contract Price is expressed in the Local Currency, the damages per day may either be

defined as a percentage or be defined as a figure in such Local Currency; however, unless all payments are to

be made in the Local Currency, the currencies of payment should be specified.

Additional Sub-Clause

If it is considered appropriate to include a provision for accelerated completion, one of the following sub-clauses

may be added:

EXAMPLE SUB-CLAUSE

If the Contractor achieves completion of the Works, or Section (if any), prior to the Time for Completion,

the Employer shall pay to the Contractor the relevant sum stated in the Appendix to Tender (as bonus for

early completion) for every calendar day which shall elapse between the date stated in the relevant Taking-

Over Certificate and the relevant time prescribed in Sub-Clause 8.2.

EXAMPLE SUB-CLAUSE

Sections are required to be completed by the dates given in the Appendix to Tender in order that such

Sections may be occupied and used by the Employer in advance of the completion of the whole of the

Works. Details of the work required to be executed to entitle the Contractor to bonus payments and the

amount of the bonuses are stated in the Employer’s Requirements. For the purposes of calculating bonus payments, the dates given in the Appendix to Tender for completion of Sections are fixed; no adjustments

of the dates by reason of granting an extension of time pursuant to these Conditions will be allowed.

Clause 9 - Tests on Completion

TEST ON COMPLETIONSub-Clause 9.1 - Contractor’s Obligations

The Employer’s Requirements should describe the tests he requires, before taking-over, to demonstrate

completion. It may also be appropriate for the Contractor’s Proposal to include detailed arrangements,

instrumentation, etc. If the Works are to be tested and taken-over in stages, the tests requirements may have to

take account of the incomplete parts of the Works.



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Clause 10 - Employer’s Taking Over

EMPLOYER’S TAKING OVERSub-Clause 10. 1 – Taking-Over Certificate

If the Works are to be taken-over in stages, these stages should to be defined as Sections, in the Appendix to

Tender. Precise geographical definitions are advisable, and the Appendix should include a table, so as to define

the aspects relating to the Retention Money releases, Time for Completion and liquidated damages for delay

(the table is shown in the example Appendix).

Clause 11 - Tests after Completion

TEST AFTER COMPLETIONSub-Clause 11.1 – Employer’s Obligations

The Employer’s Requirements should describe the tests he requires, after taking-over, to verify that the Works

fulfil his performance requirements. For some types of Works, these Tests may be the most difficult to specify

well, although they are critical to a successful outcome. It may be appropriate for the Contractor's Proposal to

include detailed arrangements, and/or to define any instrumentation required, in addition to that included in

the Works. With many types of Works, it may be essential to define the physical inputs and/or for tenderers to

prescribe (in a Schedule, probably) the performance criteria which their plant will achieve.Tests after Completion are usually carried out by the Employer, with guidance from the Contractor’s staff. If

other arrangements are envisaged, they should be specified, and amendment of the Sub-Clause may be

required.

Sub-Clause 11.4 - Failure to Pass Tests after Completion

If the first part of this Sub-Clause is to apply, the method of calculating liquidated damages (based on the

extent of the failure) should be defined in the Appendix to Tender, and the Employer's Requirements should

specify the minimum acceptable performance criteria.

1

Clause 12 - Defects Liability

DEFECTS LIABILITYSub-Clause 12.5 - Removal of Defective Work

If the Plant to be supplied under the Contract is such that the value of an item which might have to be removed

from the site is substantial (compared, for example, with the amount of the performance security), it may be

appropriate to amend the Sub-Clause, so as to require the Contractor to provide additional security in these

circumstances.

Sub-Clause 12. 10 - Unfulfilled Obligations

It may be necessary to review the effect of this Sub-Clause in relation to the period of liability which theapplicable law may impose.



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Clause 13 - Contract Price and Payment

CONTRACT PRICE AND PAYMENTSub-Clause 13.1 - The Contract Price

When writing Part II, consideration should be given to the amount and timing of payment(s) to the Contractor.

A positive cash flow is clearly of benefit to the Contractor, and tenderers will take account of the interim

payment procedures when preparing their tenders.

Normally, this type of contract is based on a lump sum price, with little or no remeasurement; the Contractor

then takes the risk of changes in cost arising from his design. The lump sum price may consist of two or moreamounts, quoted in the currencies of payment (which may, but need not, include the Local Currency).

In order to value Variations, the Tenderer can be required to submit a detailed breakdown of the Contract Price,

including quantities, unit rates and other pricing information; such information can also be used for the Interim

Payment Certificates. However, that information may not have been competitively priced; when the tender

documents are being prepared, the Employer must decide whether he is prepared to be bound by such

information. If not, he should have ensured that the Employer's Representative has the necessary expertise to

value any Variations which may be required.

Additional Sub-Clauses may be required to cover any exceptions to the options set out in Sub-Clause 13. 1, and

any other matters relating to payment.

If Sub-Clause 13.1(a) is not to apply, the method of determining the Contract Price should be defined in

additional Sub-Clauses, as envisaged in the last sentence of Sub-Clause 13.1. If the requirements involve

remeasurement, the following wording might be appropriate for one of such additional Sub-Clauses:

EXAMPLE SUB-CLAUSE ON REMEASUREMENT

The Employer’s Representative shall ascertain and determine by measurement the value of those parts of

the Works which are to be remeasured in accordance with the Contract (note: the parts must be defined,

here or elsewhere). Such parts of the Works shall be measured net, notwithstanding any general or local

custom, except where otherwise provided for in the Contract. The Employer's Representative shall, when

he requires any such part of the Works to be measured, give reasonable notice to the Contractor's

Representative, who shall promptly:(a) attend or send a qualified representative to assist the Employer’s Representative in making such

measurement, and

(b) supply all particulars required by the Employer’s Representative.

Should the Contractor not attend, or neglect or omit to send such representative, then the measurement

made by the Employer’s Representative or approved by him shall be taken to be the correct measurement

of such part of the Works.

If Sub-Clause 13. 1 (b) is not to apply, the method of determining the adjustments to the Contract Price should

be defined in additional Sub-Clause(s).

EXAMPLE SUB-CLAUSE FOR ADJUSTMENT FOR CHANGES IN COST

The amounts payable to the Contractor and valued at base prices in accordance with Schedule ... shall

be adjusted for rises or falls in the cost of labour, Contractor's Equipment, Plant, Materials and other

inputs to the Works, by the addition or deduction of the amounts determined by the formulae prescribed

in this Sub-Clause. To the extent that full compensation for any rise or fall in costs to the Contractor is

not covered by the provisions of this or other clauses in the Contract, the Contract Price shall be deemed

to include amounts to cover the contingency of such other rise or fall in costs.



15

The amount to be added to or deducted from the Interim Payment certificates for changes in cost and

legislation shall be determined from formulae for each of the currencies in which the Contract Price is

payable and for each of the sections of work priced in the said Schedule. The formulae will be of the

following general type:

P n = a + b Ln + c M n + d E n + etc

Lo M o E o

where:

“ P n” is the adjustment factor to be applied to the estimated value of the work carried out in month

“n”

“ a” is a fixed coefficient, specified in the Appendix to Tender, representing the non-adjustable portion

in contractual payments;

“ b”, “ c”, “ d ”, etc are coefficients representing the estimated proportion of each cost element (labour,

materials, etc) in the Works, as specified in the Appendix to Tender;

“ Ln”, “ M n”, “ E o”, etc are the current cost indices or reference prices for month “n”, determined,in the relevant currency of payment, applicable to each cost element on the date 49 days prior to the

last day of the period to which the particular Interim Payment Certificate is related; and

“ Lo”, “ M o”, “ E o”, etc are the base cost indices or reference prices corresponding to the above

cost elements, in the relevant currency of payment, on the Base Date.

The cost indices or reference prices specified in the Appendix to Tender shall be used. In the event of

ambiguity as to the source, it shall be determined by the Employer’s Representative; reference shall be

made to the values of the indices at stated dates (quoted in the fourth and fifth columns respectively of

said Appendix) for the purposes of clarification of the source, but it is understood that such dates (and

thus such values) may not correspond to the base cost indices. In cases where the Currency of Index isnot the relevant currency of payment, the index shall be converted into the relevant currency of payment

at the selling rate established by the Central Bank of the Country. If at any time a current index (for the

date 49 days prior to the last day of the period to which the particular Interim Payment Certificate is

related) is unavailable, a provisional index as determined by the Employer’s Representative shall be used,

subject to subsequent correction of the amounts certified when the current index is available.

If the Contractor fails to complete the Works within the Time for Completion, adjustment of prices

thereafter shall be made using either each index or price applicable on the date 49 days prior to the expiry

of the Time for Completion, or the current index or price, whichever is more favourable to the Employer;

provided that, if an extension of time is granted in accordance with Sub-Clause 8.3, the above provision

shall apply to the extended time for completion.

The weightings (coefficients) for each of the factors of cost given in the Appendix to Tender shall only be

adjusted if they have been rendered unreasonable, unbalanced or inapplicable, as a result of Variations.

The following table may be included in the Appendix to Tender (the fixed element, for which 0. 10 is often

considered appropriate, is entered before tender documents are issued, the other data being completed by the

Tenderer):



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Price Adjustment Formulae; for payments in (currency)

Coefficients and Indices ………………………………………..

Coefficient;

Scope of index

Country of origin;

Currency of index

Source of index;

Title/definition

Value on stated date (s)*

Value Date

a = 0.10 Fixed

b =………..labour

c =……………….

d =…………...….

e =…………...….

* These values and dates confirm the definition of each index, but do not define Base Date indices

If Sub-Clause 13.1(c) is not apply, additional Sub-Clause(s) should be added.

EXAMPLE SUB-CLAUSE ON EXEMPTION FROM DUTIES

Except to the extent specified otherwise, all Contractor’s Equipment, Temporary Works, Plant and

Materials (hereinafter jointly referred to as “Goods”) imported by the Contractor into the Country for the

purpose of or in connection with the Contract shall be exempt from customs and other import duties, ifthe Employer’s prior written approval is obtained for such imports. The Employer shall provide documents

for such exemption, for the Contractor to present in order to clear the Goods through Customs. If

exemption is not then granted, the customs duties payable and paid shall be reimbursed by the Employer.

All imported Goods, which are not incorporated in or expended in connection with the Works, shall be

exported on completion of the Contract; if not exported, the Goods will be assessed for duties as applicable

to the Goods involved in accordance with the current regulations in the Country.

The exemption provided for in the preceding paragraph shall not apply to:

(a) Goods which are locally produced unless they are not available in sufficient quantities or are of a

different standard to that which is necessary for the Works; and

(b) any element of duly or tax inherent in the price of goods or services procured in the Country, which

shall be deemed to be included in the Contract Price.

Port dues, quay dues and, except as set out above , any element of tax or duty inherent in the price of goods

or services shall be deemed to be included in the Contract Price.

EXAMPLE SUB-CLAUSE ON EXEMPTION FROM TAXES

Expatriate (foreign) personnel shall not be liable for income tax levied in the Country on earnings paid

in Foreign Currency, or for such tax levied on subsistence, rentals and similar services directly furnished

by the Contractor to his personnel, or for allowances in lieu. If such personnel have part of their earnings

paid in Foreign Currency in the Country, there shall be no restriction on the export by them at the

conclusion of their term of service on the Works of any balance remaining of their earnings paid in Foreign

Currencies. The Employer shall seek exemption for the purposes of this Sub-Clause; if it is not granted,

the payments made shall be reimbursed by the Employer.

Sub-Clause 13.2 - Advance Payments

The total of the advances (and the number of instalments) must be specified in the Appendix to Tender, unless

no such advances are to be paid. The rate of deduction for the repayments should be checked to ensure that

repayment is achieved before completion; the typical figures in sub-paragraphs (a) and (b) of the Part I Sub-

Clause are based on the assumption that the total of the advances is less than 22% of the Contract Price. The

acceptable form(s) of guarantee should be included in the tender documents, annexed to Part II: an example

form is annexed to this document, as Annex C.



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Sub-Clause 13.4 - Schedule of Payments

Part I contains provisions for interim payments to the Contractor, which can be based on a Schedule of Payments

or on any other basis for determining interim valuation; if a latter basis is adopted, details should be added in

Part II. If payments are to be specified in a Schedule of Payments, the. “minimum amount of interim certificates”

could be omitted from the Appendix to Tender, and the Schedule of Payments could be in one of the following

forms:

(a) an amount (or percentage of the Contract Price) could be entered for each month during the Time for

Completion, which can prove unreasonable if the Contractor’s progress differs significantly from the

expectation on which the Schedule was based; or

(b) the Schedule could be based on actual progress achieved in executing the Works, which necessitates

careful definition of the payment milestones; otherwise, disagreements may arise when the work

required for a payment milestone is 99.99% achieved but the balance cannot be completed until some

months later.

The figures inserted by the Tenderer in the Schedule of Payments should be compared with his tender

programme (if any), to assess whether it they are reasonably consistent with each other. If the Works consists

of few different types of operations, an alternative approach for interim valuations may be appropriate.

EXAMPLE SUB-CLAUSE FOR INTERIM VALUATION PROCEDURE

Prior to commencing construction of the Permanent Works, the Contractor shall submit a bill of principal

quantities of the Permanent Works (referred to in this Sub-Clause as "the BPQPW”, together with such

supporting information and calculations as the Employer's Representative may reasonably require. The

BPQPW shall include the anticipated final quantities of the principal items of Permanent Works, which

shall have been priced using all-in rates such that the total amount equals the Contract Price. The BPQPW

shall not contain priced items for design or for Temporary Works; the value of each element of such work,

and of any other work elements not described in the BPQPW , shall each be included in the rates for

Permanent Works which are to be constructed after such element is carried out. The BPQPW shall be

subject to the approval of the Employer’s Representative, which may at any time be withdrawn, and shall

be without prejudice to the final amount due under the Contract. The BPQPW shall be revised and reissued

if it appears at any time before Taking-Over that it will not fully represent the Permanent Works when

complete.

During the Time for Completion, the contract value for the purposes, of sub-paragraph (a) of Sub-

Clause 13.3 shall not exceed the amount calculated from the current BPQPW, based on the quantities of

Permanent Works which have been constructed in accordance with the Contract. The Contractor's interim

statement shall be in the same form as that of the current BPQPW and shall be accompanied by the

Contractor’s signed statement that the current BPQPW attached thereto (including anticipated final

quantities) and the as-constructed quantities are all correct; each such statement shall also be

accompanied by a Construction Certificate, signed by the Contractor’s Representative, certifying that the

Part of the Works constructed to date complies with the Contract. However, the Contractor may propose

such lesser amount as seems reasonable, supported with appropriate calculations on a similar basis to the

procedure described in this Sub-Clause.

Sub-Clause 13.5 - Plant and Materials for the Permanent Works

If payment is to be made for these items prior to their arrival at Site, a further Sub-Clause may be added:

EXAMPLE SUB-CLAUSE FOR PAYMENT UPON SHIPMENT

Interim Payment Certificates shall include (i) an additional amount for Plant and Materials which have

been shipped to the Site for incorporation in the Permanent Works, and (ii) a deduction when payment is

due under Sub-Clause 13.5. The Employer's Representative shall determine each addition and deduction

in accordance with the following provisions:



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(a) no addition shall be included in the Interim Payment Certificate unless, in the opinion of the

Employer’s Representative:

(i) the Plant and Materials have been shipped to the Country, en route to the Site, in accordance

with the Contract;

(ii) the Contractor has submitted a clean shipped bill of lading or other evidence of shipment,

evidence of payment of freight and insurance, and other documents as the Employer’s

Representative may reasonably require, together with an unconditional bank guarantee in a form

and by a bank acceptable to the Employer in amounts and currencies equal to the amount due

under sub-paragraph (b) of this Sub-Clause: such guarantee shall be valid until the Plant and

Materials are properly stored on Site and protected against loss, damage or deterioration;

(iii) the Contractor’s records of the requirements, orders, receipts and use of Plant and Materials are

kept in a form approved by the Employer’s Representative, and such records are available for

inspection by the Employer’s Representative;

(iv) the Contractor has submitted a statement of the Cost of acquiring and shipping the Plant and

Materials to the port (or other place) of entry into the Country, together with such documents

as may be required for the purpose of evidencing such Cost; and

(v) the Plant and Materials are those listed for this Sub-Clause in the Appendix to Tender;

(b) the additional amount to be certified shall be the equivalent of seventy percent of the cost of the Plantand Materials delivered to the port (or other place) of entry into the Country, as determined by the

Employer’s Representative after review of the documents mentioned in sub-paragraph (a) above,

taking account of the contract value of such Plant and Materials as determined and considered

appropriate by the Employer's Representative;

(c) the amount of the deduction for any Plant and Materials for which payment is due under Sub-

Clause 13.5 shall be equivalent to the addition previously certified by the Employer’s Representative

for such Plant and Materials under sub-paragraph (b) above; and

(d) the currencies for such additions and deductions shall be determined by the Employer’s

Representative as described in Sub-Clause 13.5.

Sub-Clause 13.7 - Payment

If a different period for payment is to apply, the Sub-Clause may be amended:

EXAMPLE

In sub-paragraph ... of Sub-Clause 13.7, delete “56” and substitute ...

If the country/countries of payment need to be specified, such details can be included in the Contract: in the

Employer’s Requirements, in the Contractor's Proposal, or in a Schedule.

Sub-Clause 13.8 - Delayed Payment

If the discount rate of the central bank in the country of the currency of payment, plus 3%, is not a reasonableindication of the Contractor's financing costs, a new rate may need to be defined; alternatively, the actual

financing Costs could be paid, taking account of local financing arrangements.

Sub-Clause 13.9 - Payment of Retention Money

If part of the Retention Money is to be released and substituted by an appropriate security, an additional Sub-

Clause may be added.



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EXAMPLE SUB-CLAUSE FOR RELEASE OF RETENTION

When the Retention Money has reached three-fifths (60%) of the limit of Retention Money stated in the

Appendix to Tender, the Employer’s Representative shall certify and the Employer shall pay half (50%) of

such limit of Retention Money to the Contractor upon lodgement with the Employer of an “on-demand”

bank guarantee issued by a bank acceptable to the Employer in a like amount. Such guarantee shall be

valid up to a date which is one hundred weeks after the due (or extended) date for completion of the Works,

and shall be returned to the Contractor upon the issue of the Performance Certificate. This release of

retention shall be in lieu of the release of the second half of the Retention Money under Sub-Clause 13.9.

Sub-Clause 13.15 - Calculation of Payments in Foreign Currency

Instead of the Contract Price being quoted in the currencies of payment, this Sub-Clause relates to the situation

where it is quoted in Local Currency only, but is paid, by application of percentages and exchange rates, in

various currencies (which may, but need not, include the Local Currency). If this Sub-Clause is to apply, the

name of the Local Currency must be stated in the Tender, so that the Contract Price is a sum in that currency

only, and the Appendix to Tender should include a table for insertion of the proportions and exchange rates

(the table is shown in the example Appendix). If all payments and deductions are not to be in the same currency

proportions, an additional Sub-Clause will be required; also, an additional table will be required in the Appendix to

Tender if there are Sections.

EXAMPLE SUB-CLAUSE FOR CALCULATION OF PAYMENTS BY PROPORTIONS All payments to the Contractor by the Employer shall be made

(a) in the case of payment(s) under Sub-Clause(s) 13.2 and (insert number of any other applicable Sub-

Clause) in (insert name of currency/currencies);

(b) in the case of payments for certain provisional sum items excluded from the Appendix to Tender, in

the currencies and proportions applicable to these items at the time when the Employer’s

Representative gives instructions for the work covered by these items to be carried out;

(c) in any other case, in the currencies and proportions stated in the Appendix to Tender as applicable

to such payment provided that the proportions of currencies stated in the Appendix to Tender may

from time to time upon the application of either party be varied as may be agreed.

All payments to the Employer by the Contractor including payments made by way of deduction or set-off

shall be made

(a) in the case of repayment(s) under Sub-Clause(s) 13.2 and (insert number of any other applicable Sub-

Clause) in (insert name of currency);

(b) in the case of liquidated damages under Sub-Clause 8.6, in (insert name of currency);

(c) in the case of reimbursement of any sum previously expended by the Employer, in the currency in which

the sum was expended by the Employer;

(d) in any other case, in such currency as may be agreed.

If the part payable in a particular currency of any sum payable to the Contractor is wholly or partly

insufficient to satisfy by way of deduction or set-off a payment due to the Employer in that currency, inaccordance with the provisions of this Sub-Clause, then the Employer may make such deduction or set-off

wholly or partly from the balance of such sum payable in other currencies.

Additional Sub-Clause - Payments in Local Currency

If all payments are to be made in Local Currency, it must be named in the Tender, so that the Contract Price is

a sum in that currency only; Sub-Clause 13.15 should be deleted, and a further Sub-Clause added.



20

EXAMPLE SUB-CLAUSE FOR A SINGLE-CURRENCY CONTRACT

The currency of account shall be the Local Currency and all payments made in accordance with the

Contract shall be in Local Currency. The Local Currency payments shall be fully convertible, except those

for local costs. The percentage attributed to local costs shall be as stated in the Appendix to Tender.

Project Financing Arrangements

For major contracts in some markets, there may be a need to resort to securing finance from entities such as

aid agencies, development banks or export credit agencies. If financing is to be procured from such institutions,

the Conditions of Contract may need to incorporate any special requirements which the relevant institution may

have. The exact wording will depend on the relevant institution, so reference will need to be made to them to

ascertain their requirements, and to seek approval of the draft tender documents. These requirements may

include tendering procedures which need to be adopted in order to render the eventual contract eligible for

financing, and/or special Sub-Clauses which may need to be incorporated into Part II. The following examples

indicate some of the topics which the institution's requirements may cover:

(a) prohibition from discrimination against the shipping companies of any one country;

(b) ensuring that the Contract is subject to a widely-accepted neutral international law;

(c) provision for arbitration at a recognised international forum in the event of disputes;

(d) giving the Contractor the right to suspend/terminate in the event of default under the financing

arrangements;

(e) restricting the right to reject Plant;

(f) specifying the payments due in the event of termination;

(g) specifying that the Contract does not become effective until certain conditions precedent have been

satisfied, including pre-disbursement conditions for the financing arrangements;

(h) obliging the Employer to make payments from his own resources if, for any reason, the funds under the

financing arrangements are insufficient to meet the payments due to the Contractor, whether due to a

default under the financing arrangements or otherwise.

In addition, the financing institution/banks may wish the Contract to include references to the financingarrangements, especially if funding from more than one source is to be arranged, to finance different elements

of supply. It is not unusual for Part II to include special provisions identifying different categories of Plant and

specifying the documents to be presented to the relevant financing institution to obtain payment. If the

financing institution's requirements are not met, it may be difficult (or even impossible) to secure suitable

financing for the project, and/or the institution may decline to provide finance for part or all of the Contract.

However, where the financing is not tied to the export of goods and services from any particular country but

is simply provided by commercial banks lending to the Employer, those banks may be concerned to ensure that

the Contractor's rights are very restricted. Such banks may wish the Contract to exclude any reference to the

financing arrangements, and/or to restrict the Contractor’s right to suspend/terminate in the event of default.

EXAMPLE FORM OF SUB-CLAUSE WHICH A FINANCING INSTITUTION MAY REQUIREThe total Contract Price of (insert amount) is made up as follows:

(breakdown into items and/or into supply/delivery/etc)

and shall be payable by the Employer to the Contractor as set out below.

(a) . . % of the total Contract Price shall be payable by a direct payment from the Employer to the

Contractor within 28 days of the Effective Date, which shall be payable against the following

documents:

(i) commercial invoice addressed to the Employer specifying the amount of the payment now due,



21

(ii) advance payment security guarantee issued by ... Bank in the form annexed,

(iii) performance security guarantee issued by ... Bank in the form annexed, and

(iv) Employer’s Representative's Interim Payment Certificate confirming the payment due and

specifying the amount.

(b) …% of the contract price for the supply of Plant shall be payable as follows:

(i) …..% of the relevant value of the Plant supplied, by direct payment from the Employer to the

Contractor on shipment of each item, against the following documents:(original) commercial invoice,

(original) shipping documents,

(original) certificate of origin,

(original) insurance certificate, and

(original) Employer’s Representative’s Interim Payment Certificate confirming the payment

due and specifying the amount.

(ii) % of the relevant value of the Plant supplied, by disbursement from the Loan Agreement to

the Contractor on shipment of each item, on presentation of a Qualifying Certificate in the form

annexed and copies of the documents listed in sub-paragraph (b)(i) above.

(c) the balance of the total Contract Price shall be payable as follows:

(i) . . % of the relevant value of the services rendered, by direct payment from the Employer to the

Contractor on execution of the relevant service, against the following documents:

(original) commercial invoice, and

(original) Employer’s Representative's Interim Payment Certificate confirming the payment

due and specifying the amount.

(ii) % of the relevant value of the services rendered, by disbursement from the Loan Agreement

to the Contractor, on presentation of a Qualifying Certificate in the form annexed and copies of

the documents listed in sub-paragraph (c)(i) above.

(d) The direct payments by the Employer specified in this Sub-Clause shall be made by an irrevocable

letter of credit established by the Employer in favour of the Contractor and confirmed by a bank

acceptable to the Contractor.

Employer, or by the Contractor (before submitting his tender). Alternatively, the Contractor may be prepared

to initiate financing arrangements and retain responsibility for them, although he would probably be unable or

unwilling to provide finance from his own resources; his financing bank's requirements will therefore affect

his attitude in contract negotiations. They might well require the Employer to make some payment during

construction, although a large proportion of the Contract Price might be withheld until the Works are complete.

This payment arrangement can be achieved either by a high percentage rate for retention, or by a suitably

completed Schedule of Payments: the Instructions to Tenderers would set out the criteria with which the tenderer

should comply. Since the Contractor would then have to arrange his own financing to cover the shortfall

between such payments and his outgoings, he (and his financing bank) would probably require some form of

security, guaranteeing payment when due.

It may be appropriate for the Employer, when preparing the tender documents, to anticipate the latter

requirement and undertake to provide a letter of credit to cover the element of payment which the Contractor

is to receive when the Works are complete. The main issue to be addressed in drawing up the letter of credit

is the documents to be presented by the Contractor to the bank when requesting the payment due. The following

Sub-Clause may be added.



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EXAMPLE SUB-CLAUSE FOR CONTRACTOR FINANCE

The Employer shall, within ... days of the Effective Date, deliver to the Contractor irrevocable letters of

credit, confirmed by a bank acceptable to the Contractor, in the total sum of . . per cent ( . . %) of the

Contract Price, payable in the proportions of currencies in which the Contract Price is due to be paid.

One letter of credit shall be issued for each currency, payable by a bank in the country of such currency.

The amounts payable under the letters of credit will be part payment of the amounts due under the Contract

upon completion of the Works. Each letter of credit shall state that it is payable when the Contractor is

entitled, under the Contract, to receive the Taking-Over Certificate for the Works, as evidenced by:

(a) such Taking-Over Certificate signed by the Employer’s Representative and endorsed on behalf of the Employer, or

(b) the sworn affidavit signed by all members of the panel of experts (insert appropriate reference) duly

authenticated by a notary public.

It may be appropriate to anticipate the possible delay to the procurement of these letters of credit:

EXAMPLE DEFINITION

Delete S-Clause 1.1.3.3 and substitute:

“Commencement Date” means the latest of the following dates:

(i) the date 28 days after the Effective Date;

(ii) the date on which the Contractor receives the notice to commence issued by the Employer's

Representative under Sub-Clause 8.1;

(iii) the date on which the Contractor receives the letters of credit under Sub-Clause ...

Clause 14 - Variations

VARIATIONSVariations can be initiated by any of three ways:

(a) the Employer’s Representative may instruct the variation under Sub-Clause 14. 1, without prior agreement

as to feasibility or price;(b) the Contractor may initiate his own proposals under Sub-Clause 14.2, to the benefit of both parties; or

(c) the Employer’s Representative may request a proposal under Sub-Clause 14.3, seeking prior agreement

so as to minimise dispute.

Sub-Clause 14.5 - Provisional Sums

Although generally inappropriate for this type of contract, a Provisional Sum may be required for parts of the

Works which are not required to be priced at the risk of the Contractor: for example, to cover goods which the

Employer wants to select, or to deal with a major uncertainty regarding sub-surface conditions. It is essential

to define the scope of each Provisional Sum (in a Schedule, probably), since such scope will then be excluded

from the other elements of the Contract Price.

If a Provisional Sum is likely to be valued under Sub-Clause 14.5 (b), the percentage should be quoted by

tenderers in the Appendix to Tender. If Provisional Sums relate to radically different types of work, it may be

appropriate to permit tenderers to quote a different percentage for each Provisional Sum.



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Clause 15 - Default of Contractor

DEFAULT OF CONTRACTORSub-Clause 15.2 - Termination

Before inviting tenders, the Employer should verify that the wording of this Sub-Clause, and any anticipated

termination, is not in conflict with the applicable law.

Clause 16 - Default of EmployerDEFAULT OF EMPLOYER

Sub-Clause 16.2 - Termination

Before inviting tenders, the Employer should verify that the wording of this Sub-Clause is not in conflict with

the applicable law; the Contractor should verify that any anticipated termination is not in conflict with such

law.

Clause 17 - Risk and Responsibility

RISK AND RESPONSABILITYSub-Clause 17.3 - Employer’s Risks

If certain risks are to be confined to the country in which the Site is located, the Sub-Clause may be amended:

EXAMPLE

At the end of each of sub-paragraphs ............................... of Sub-Clause 17.3, insert “in the Country,”

Additional Sub-Clause - Use of Employer’s Accommodation/Facilities

If the Contractor is to occupy the Employer's facilities temporarily, an additional sub-clause may be added:

EXAMPLE SUB-CLAUSE

The Contractor shall take full responsibility for the care of the items detailed below, from the respective

dates of use or occupation for the purposes of the Contract to the respective dates of hand- over or cessationof such occupation (although such hand-over or cessation of such occupation may take place after the

date stated in the Taking-Over Certificate for the Works): (insert details)

If any loss or damage happens to any of the above items while the Contractor is responsible for their care,

arising from any cause whatsoever other than the Employer's risks listed in Sub-Clause 17.3, the

Contractor shall, at his own cost, rectify such loss or damage so that the items conform with the provisions

of the Contract to the satisfaction of the Employer’s Representative.

Clause 18 - Insurance

INSURANCESThe wording in Part I is based on the Contractor procuring insurances consistent with the general terms agreed

with the Employer. The Instructions to Tenderers may therefore require tenderers to include the terms in their

Proposals.

In certain circumstances, the Employer may decide not to insist on insurance for design under Sub-Clause 18.1,and/or to arrange insurance in respect of the Works and Third Party liability himself. The tender documentsshould include details of the insurances to be provided by the Employer, as an annex to Part II, so that tenderers



24

can estimate what other insurances they wish to have for their own protection. Such details should include the

conditions, limits, exceptions and deductibles, preferably in the form of a copy of each policy.

EXAMPLE SUB-CLAUSE FOR WORKS INSURANCE BY THE EMPLOYER

Delete Sub-Clause 18.2 and substitute:

The Employer shall insure the Construction Documents, Plant, Materials and Works in the joint names of

the Employer, the Contractor and Subcontractors, against all loss or damage arising from any insurable

cause other than the Employer’s risks listed in Sub-Clause 17.3. Such insurance shall be for a limit of not

less than the full replacement cost (including profit) and shall also cover the costs of demolition and

removal of debris. Such insurance shall be in such a manner that the Employer and the Contractor are

covered from the date by which the evidence of such insurance is to be submitted under Sub-Clause 18.5,

until the date of issue of the Taking-Over Certificate for the Works. The Employer shall extend such

insurance to provide cover until the date of issue of the Performance Certificate, for loss or damage for

which the Contractor is liable arising from a cause occurring prior to the issue of the Taking-Over

Certificate, and for loss or damage occasioned by the Contractor or Subcontractors in the course of any

other operations (including those under Clauses 11 and 12).

The Contractor shall insure the Contractor’s Equipment in the joint names of the Employer, the Contractor

and Subcontractors, against all loss or damage arising from any insurable cause other than the Employer’s

risks listed in Sub-Clause 17.3. Such insurance shall be for a limit of not less than the full replacement

value (including delivery to Site). Such insurance shall be in such a manner that each item of equipmentis insured while it is being transported to the Site and throughout the period it is on or near the Site.

EXAMPLE SUB-CLAUSE FOR THIRD PARTY INSURANCE BY EMPLOYER

Delete Sub-Clause 18.3 and substitute:

The Employer shall insure against liability to third parties, in the joint names of the Employer, the

Contractor and Subcontractors, for any loss, damage, death or bodily injury which may occur to any

physical property (except things insured under Sub-Clause 18.2) or to any person (except persons insured

under Sub-Clause 18.4), which may arise out of the performance of the Contract and occurring before the

issue of the Performance Certificate.

EXAMPLE GENERAL REQUIREMENTS FOR USE WITH ABOVE EXAMPLES

Delete Sub-Clause 18.5 and substitute: Each insurance policy shall be consistent with the general terms agreed in writing prior to the Effective

Date, and such agreement shall take precedence over the provisions of this Clause.

The Contractor shall, within the period stated in the Appendix to Tender (calculated from the

Commencement Date), submit to the Employer appropriate evidence that the insurances for which the

Contractor is responsible have been effected. When each premium has been paid, the Contractor shall

submit copy receipts to the Employer. The Contractor shall effect all insurances for which the Contractor

is responsible with insurers and in terms approved by the Employer. Each policy insuring against loss or

damage shall provide for payments to be made in the currencies required to rectify such loss or damage.

Payments received from insurers shall be used for the rectification of the loss or damage. The Contractor

(and, if appropriate, the Employer) shall comply with the conditions stipulated in each of the insurance policies.

The Employer shall, within 14 days after receiving the performance security described in Sub-Clause 4.2,

submit to the Contractor evidence that the insurances for which the Employer is responsible have been

effected, and copies of the relevant policies of insurance. When each premium has been paid, the Employer

shall submit copy receipts to the Contractor.

The Employer shall effect all insurances for which the Employer is responsible with insurers, and in the

terms, approved solely by the Employer. All such insurances shall be in accordance with the details of

insurance annexed, unless otherwise agreed with the Contractor. The Contractor shall be deemed to have

fully understood such details, and to have satisfied himself before submitting his Tender as to the extent

of the cover provided under such insurances (taking account of the conditions, limits, exceptions and



25

deductibles) and as to the correctness and sufficiency of the Contract Price, which shall be deemed to

include the cost of any further insurances which the Contractor wishes to effect. The Contractor and

Subcontractors shall accept the insurances effected by the Employer, as if they had effected such

insurances; they and the Employer shall comply with the terms and conditions stipulated in each such

policy. Payments received under a policy insuring against loss or damage shall be used for the

rectification of the loss or damage.

Each party shall make no material alteration to the terms of any insurance for which he is responsible,

without the prior agreement of the other party. If an insurer makes (or purports to make) any such

alteration, the party notified by such insurer shall notify the other party immediately. If either party fails to effect and keep in force any of the insurances which he is required to effect under

the Contract, or fails to provide satisfactory evidence, policies and receipts in accordance with this Sub-

Clause, the other party may, without prejudice to any other right or remedy, effect insurance for the

coverage relevant to such default, and pay the premiums due. Such payments shall be recoverable from

the party responsible for effecting such insurance.

Nothing in this Clause limits the obligations, liabilities or responsibilities of the Contractor or the

Employer, under the other terms of the Contract or otherwise. Any amounts not insured or not recovered

from the insurers (including the cost of preparing insurance claims) shall be borne by the Contractor

and/or the Employer accordingly.

Clause 19 - Force Majeure

FORCE MAJEUREBefore inviting tenders, the Employer should:

(a) verify that the wording of this Clause, and any anticipated action under it, is not in conflict with the

applicable law, and

(b) consider whether to amend the period of 182 days in Sub-Clause 19.6.

Clause 20 - Claims, Disputes and Arbitration 'CLAIMS, DISPUTES AND ARBITRATION’Sub-Clause 20.3 - Dispute Adjudication Board

The Contract should include provisions which, whilst not discouraging the parties from reaching agreement as

the works proceed, allows them to refer contentious matters to impartial individual(s) with suitable technical

qualifications. The provisions depend, for their success, on the parties' confidence in the agreed individual(s)

and in the individual's personal and professional qualities. Therefore, it is essential that the arrangements are

not imposed by either party on the other party, and that the nominating authority is wholly impartial: FIDIC is

prepared to perform this role, provided delegation is permissible (see the example wording in the Appendix to

Tender). It is preferable, but not essential, for the individual(s) to be agreed by the time the Tender is accepted:

the parties may be able to agree the appointment immediately after the award of the Contract, when relationships

are usually favourable.

The “Dispute Adjudication Board” is the defined term for such individual(s), but such definition does not

preclude the use of one expert, who would thus act as a one-person Board. At an early stage, consideration

should be given as to whether a one-person or three-person Board is preferable for a particular project, taking

account of its size, duration and the fields of expertise which will be involved. For some projects, it may be

considered appropriate to appoint a one-person Dispute Adjudication Board for each major field of expertise

relevant to the Works; however, this could give rise to problems if, when a dispute arises, the parties cannot

agree to which person it is to be referred.



26

For a one-person Board, the Employer may suggest (in a Schedule, possibly, with curriculum vitae) the names

of acceptable persons for the Dispute Adjudication Board, for tenderers to select. From the list, each tenderer

would nominate acceptable potential members, preferably with alternates in case some subsequently decline

the appointment.

For a three-person Board, the Employer may similarly propose one member, and invite tenderers to approve

and to suggest (in a Schedule, possibly, with curriculum vitae) the names of acceptable persons for another

member of the Dispute Adjudication Board, for the Employer’s approval. The Employer could similarly

suggest names of acceptable persons for the third member of the Dispute Adjudication Board, for tenderers to

select.Whichever method is used by the parties to attempt agreement on the appointment of the Dispute Adjudication

Board, it may be preferable to avoid the matter becoming a major part of the pre-contract negotiations. The

example wording in the Tender therefore seeks to avoid the tenderer’s suggestions becoming a condition of the

Tender, introducing a potential delay to the award of a contract.

Sub-Clause 20.5 - Amicable Settlement

The provisions of this Sub-Clause are intended to encourage the parties to settle a dispute amicably: for

example, by direct negotiation, mediation or conciliation. Amicable settlement procedures depend, for their

success, on confidentiality and on agreement of the procedure; therefore, it is preferable that such procedures

are not imposed by either party on the other party. The parties could consider initiating proposals for such procedures upon award of the Contract, when relationships are usually favourable. Alternatively, it may be

feasible to await the existence of a dispute before agreeing the procedure; if agreement is then difficult, a

successful outcome of any amicable settlement procedure would be just as difficult.

Sub-Clause 20.6 - Arbitration

The Contract should include provisions for the resolution by international arbitration of any disputes which are

not resolved amicably. International commercial arbitration has practical advantages over litigation and may be

more mutually acceptable to the parties.

Careful consideration should be given to ensuring that the international arbitration rules chosen are compatible

with the provisions of Clause 20 and the other elements to be set out in the Appendix to Tender., The Rules ofArbitration of the International Chamber of Commerce (the “ICC”) are frequently included in international

construction contracts. In the absence of specific stipulations as to the number of arbitrators, place of arbitration

and language of arbitration, the ICC will decide on the number of arbitrators (typically three in any substantial

construction dispute) and on the place of arbitration.

If the UNCITRAL (or other non-ICC) arbitration rules are preferred, it is necessary to designate, in the

Appendix to Tender, an institution to nominate the arbitrators or to administer the arbitration, unless such

institution is named (and their role specified) in the arbitration rules. However, it will be necessary to ensure,

before so designating it in the Appendix to Tender, that it is prepared to so nominate or administer.

For major projects tendered internationally, it is desirable that the place of arbitration be situated in a state other

than that of the Employer or Contractor or any financing institution. The situs state should have a modem and

liberal arbitration law and should have ratified a bilateral or multilateral convention (such as the 1958 New

York Convention on the Recognition and Enforcement of Foreign Arbitral Awards), or both, that would facilitate

the enforcement of an arbitral award in the states of the parties to the Contract.

It may be considered desirable in some cases for other parties to be joined into any arbitration between the

Employer and the Contractor, thereby creating a multi-party arbitration. While this may be feasible, multi-party

arbitration clauses require skilful drafting on a case-by-case basis. No satisfactory standard form of multi-party

arbitration clause for international use has yet been developed.



27

Annex A: EXAMPLE FORM OF PERFORMANCE GUARANTEE

THIS AGREEMENT is made on the ____________ day of __________________ 20 _________________

BETWEEN: (1) _____________________________________ [name of bank surety or insurance company

of ________________________________ [address] (hereinafter called “the Guarantor”); and

(2) _______________________________________________________ [name of Employer]

of _____________________________________ [address] (hereinafter called “the Employer”)WHEREAS:

A This Agreement is supplemental to a contract (hereinafter called “the Contract”) made between (1) theEmployer and (2)[name of Contractor] of ______________________________ [address of Contractor]

(hereinafter called "the Contractor") whereby the Contractor agreed and undertook to design and execute

and complete and remedy any defects in the Works of ____________________ [name of Contract and

brief description of the Works] for the sum of __________________________ [amount in Contract

currency] being the Contract Price; and

B The Guarantor has agreed to guarantee the due performance of the Contract in the manner

hereinafter appearing.

IT IS HEREBY AGREED as follows:

1. Subject to Clause 2 if the Contractor (unless relieved from the performance by any clause of the Contract or

by statute or by the decision of a tribunal of competent jurisdiction) shall in any respect fail to execute theContract or commit any breach of his obligations thereunder then the Guarantor will indemnify and pay the

Employer the damages sustained by him as a consequence of such failure or breach not exceeding the

aggregate sum of _____________________ [amount of guarantee] _________________ [in words], such

sums being payable in the types and proportions of currencies in which the Contract Price is payable.

2. The payment by the Guarantor will only be made if, prior to the earlier of the date of issue of the

Performance Certificate or ______________ (“the End Date”), the Guarantor has received:

(a) written notice from both the Employer and the Contractor that the amount of damages payable to the

Employer is agreed between the Employer and the Contractor; or

(b) a copy of a notice of arbitration issued by either the Employer or the Contractor under the Contract

which is subsequently followed (whether before or after the End Date) by a legally certified copy of an award

issued in arbitration proceedings carried out in conformity with the Contract that the amount of the damages

is payable to the Employer; or

(c) a legally certified copy of a decision of the Dispute Adjudication Board under the Contract in respect which

no notice of dissatisfaction has been given by either the Employer or the Contractor within twenty eight

days of the decision under the Contract stating an amount due to the Employer.

3. The Guarantor shall not be discharged or released from his Guarantee by an arrangement between the

Contractor and the Employer, with or without the consent of the Guarantor, or by any forbearance on the

part of the Employer, whether as to payment, time, performance or otherwise, and any notice to the

Guarantor of any such arrangement, alteration or forbearance is hereby expressly waived.

4. This Guarantee shall not be assignable by the Employer and upon it ceasing to be in full force and effect the

Employer shall return the same to the Guarantor within 14 days.

5. Words and expressions defined in the Contract shall so far as the context admits bear the same meaning in

this Guarantee.

6. This Guarantee shall be governed by the laws _________________________________________________

Signed by_____________________________________ Signed by ________________________________

for and on behalf of _____________________________ for and on behalf of ________________________

on (date) _____________________________________ on (date) _________________________________

in the capacity of ______________________________ in the capacity of __________________________

and in the presence of ___________________________ and in the presence of ______________________

Seal (where applicable) _________________________ Seal (where applicable)



28

Annex B: EXAMPLE FORM OF SURETY BOND FOR PERFORMANCE

By this Bond ________________ [name and address of Contractor] as Principal (hereinafter called “the

Contractor”) and _____________ [name, legal title, and address of surety, bonding company, or insurance

company] as Surety (hereinafter called “the Surety”), are held and firmly bound unto __________ [name and

address of Employer] as Obligee (hereinafter called “the Employer”) in the amount of _________ [amount of

bond] _____________________ [in words], for the payment of which sum well and truly to be made in the

types and proportions of currencies in which the Contract Price is payable, the Contractor and the Surety bind

themselves, their heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents.

WHEREAS the Contractor has entered into a written Agreement with the Employer dated the _________ day

of.____20 _____ for _____________________ [name of Contract] in accordance with the documents listed

therein, which are by reference made part hereof and are hereinafter referred to as the Contract.

NOW, THEREFORE, the Condition of this Obligation is such that, if the Contractor shall promptly and

faithfully perform the said Contract (including any amendments thereto) then this obligation shall be null and

void; otherwise it shall remain in full force and effect. Whenever the Contractor shall be, and declared by the

Employer to be, in default under the Contract, the Employer having performed the Employer’s obligations

thereunder, the Surety may promptly remedy the default, or shall promptly:

(1) complete the Contract in accordance with its terms and conditions; or(2) obtain a tender or tenders from qualified tenderers for submission to the Employer for completing the

Contract in accordance with its terms and conditions, and upon determination by the Employer and the

Surety of the lowest responsive tenderer, arrange for a Contract between such tenderer and Employer and

make available as work progresses (even though there should be a default or a succession of defaults under the

Contract or Contracts of completion arranged under this paragraph) sufficient funds to pay the cost of

completion less the Balance of the Contract Price; but not exceeding, including other costs and damages

for which the Surety may be liable hereunder, the amount set forth in the first paragraph hereof. The term

“Balance of the Contract Price,” as used in this paragraph, shall mean the total amount payable by

Employer to Contractor under the Contract, less the amount properly paid by Employer to Contractor; or

(3) pay the Employer the amount required by Employer to complete the Contract in accordance .with its terms

conditions up to a total not exceeding the amount of this Bond.

The Surety shall not be liable for a greater sum than the specified penalty of this Bond.

Any suit under this Bond must be instituted before the issue of the Performance Certificate.

No right of action shall accrue on this Bond to or for the use of any person or corporation other than the

Employer named herein or the heirs, executors, administrators, successors and assigns of the Employer.

In testimony whereof, the Contractor has hereunto set his hand and affixed his seal, and the Surety has caused

these presents to be sealed with his corporate seal duly attested by the signature of his legal representative, this

____ day of ____ .

Signed by _________________________________ Signed by ____________________________________

for and on behalf of _________________________ for and on behalf of ____________________________

on (date) __________________________________ on (date) ____________________________________

in the capacity of ___________________________ in the capacity of ______________________________

and in the presence of ________________________ and in the presence of __________________________

Seal (where applicable) _______________________ Seal (where applicable) _________________________



29

Annex C: EXAMPLE FORM OF GUARANTEE FOR ADVANCE PAYMENT

To: __________________________________________[name of Employer]

___________________________________________[address of Employer]

___________________________________________[name of Contract]

Gentlemen:

In accordance with the provisions of the Conditions of Contract, Sub-Clause 13.2 (“Advance Payments”) of theabove-mentioned Contract, _______________________ [name and address of Contractor] (hereinafter called

“the Contractor”) shall deposit with ________________ [name of Employer] a bank guarantee to guarantee

his proper and faithful performance under the said Clause of the Contract in an amount of [amount of

guarantee] ___________________________________ [in words].

We, the _______________________ [bank or financial institution], as instructed by the Contractor, agree

unconditionally and irrevocably to guarantee as primary obligor and not as Surety merely, the payment to

______________________________ [Name of Employer] on his first demand without whatsoever right of

objection on our part and without his first claim to the Contractor, in the amount not exceeding [amount of

guarantee] ____________________ [in words].

We further agree that no change or addition to or other modification of the terms of the Contract or of Works to

be performed thereunder or of any of the Contract documents which may be made between _______ [name

of Employer] and the Contractor, shall in any way release us from any liability under this guarantee, and we

hereby waive notice of any such change, addition or modification.

No claim may be made by you under this guarantee until we have received notice in writing from you

specifying the amount of each advance payment which has been paid to the Contractor pursuant to the

Contract.

Our outstanding liability under this guarantee will reduce by such amounts as may be notified to us in your

authorised writing and stated to be the reduction of this guarantee required to be made in accordance with the

Contract by reason of the repayments made by the Contractor.

This guarantee shall remain valid and in full effect from the date of the first advance payment under the

Contract until__________________ [name of Employer] receives full repayment of the same amount from the

Contractor.

Yours truly,

Signature and Seal: ___________________________________

Name of Bank: ___________________________________

Address: ___________________________________

___________________________________

___________________________________

Date: ___________________________________




CONDITIONS OF CONTRACTFOR DESIGN – BUILD

AND TURNKEY

FORMS OF TENDER AND AGREEMENT AND FIDIC MODEL TERMS

FOR THE APPOINTMENT OF A DISPUTE ADJUDICATION BOARD

FIRST EDITION 1995

ISBN 2-88432-010-5



1

TENDER

NAME OF CONTRACT:

TO:

GENTLEMEN,

We have examined the Conditions of Contract, Employer's Requirements, Schedules, Addenda Nos _________

and the matters set out in the Appendix hereto. We have understood and checked these documents and have not

found any errors in them. We accordingly offer to design, execute and complete the said Works and remedy any

defects, fit for purpose in conformity with these documents and the enclosed Proposal, for the fixed lump

sum of

(in currencies of payment) __________________________________________________________________________

_________________________________________________________________________________________

We accept your suggestions for the appointment of the Dispute Adjudication Board, as set out in Schedule ____

[We have completed the Schedule by adding our suggestions for the other member of this three-person Board,

but these suggestions are not conditions of this Tender]. *

We agree to abide by this Tender until __________________ and it shall remain binding upon us and may be

accepted at any time before that date. We acknowledge that the Appendix forms part of our Tender.

If our Tender is accepted, we will provide the specified performance security, commence the Works as soon as

reasonably possible after receiving the Employer’s Representative's notice to commence, and complete the

Works in accordance with the above-named documents within the time stated in the Appendix to Tender.

Unless and until a formal Agreement is prepared and executed this Tender, together with your written acceptance

thereof, shall constitute a binding contract between us.

We understand that you are not bound to accept the lowest or any tender you may receive.

We are, Gentlemen

Yours faithfully

Signature ___________________________________ in the capacity of_______________________________

duly authorised to sign tenders for and on behalf of _______________________________________________

_________________________________________________________________________________________

Address __________________________________________________________________________________

_________________________________________________________________________________________

Date _____________________________________

* If the Tenderer does not accept, this paragraph may be deleted and replaced by:

We do not accept your suggestions for the appointment of the Dispute Adjudication Board, and propose that we

jointly agree upon the appointment after the Effective Date (unless previously agreed) in accordance with Sub-

Clause 20.3 of the Conditions of Contract. [OPTIONAL: Our Proposal includes our suggestions for this

appointment, but these suggestions are not conditions of this Tender.]



2

Appendix to Tender

[Note: with the exception of the items for which the Employer’s requirements have been

inserted, the following information must be completed before the Tender is submitted]

Sub-Clause

Employer’s name and address ______________ 1.1.2.1 ___________________________________

& 1.8 ___________________________________

Contractor’s name and address _____________ 1.1.2.2 ___________________________________

& 1.8 ___________________________________

Name and address of 1.1.2.3 ___________________________________

the Employer's Representative ______________ & 1.8 ___________________________________

Time for notice to commence ______________ 8.1 _______________________________ days

Time for Completion of the Works __________ 1.1.3.4 _______________________________ days

If Sub-Clause 13.15 does not apply:

Foreign Currency/Currencies _________ 1.1.5.3 as named in the TENDER

Law of the Contract ______________________ 1.4 ___________________________________

Ruling language _________________________ 1.4 ___________________________________

Language for communications _____________ 1.4 ___________________________________

Electronic transmission systems ____________ 1.8 ___________________________________

Confidential details ______________________ 1.12 ___________________________________

Time for access to the Site _________________ 2.2 ______ days after the Commencement Date

Amount of performance security ____________ 4.2 _____ % of the Contract Price, and in the

proportions of currencies in which the

Contract Price is payable

Time for submission of programme _________ 4.14 ____________ days after the Effective Date

Normal working hours ____________________ 6.5 ___________________________________



3

Liquidated damages for the Works ________ 8.6 _______ % of the Contract Price per day, in

the proportions of currencies in which the

Contract Price is payable

Limit of liquidated damages for delay ______ 8.6 ___________________ % of the Contract Price

If Clause II applies:

Liquidated damages for failing

Tests after Completion 11.4

(details of test failure)_______________

(details of test failure)_______________

Total amount of advance payments ________ 13.2 __________________ % of the Contract Price

Number and timing of instalments ________ 13.2 ______________________________________

Start repayment of advance payment _______ 13.2(a) when payments are 10 % of the Contract Price

Repayment amortisation of advance payment 13.2(b) __________________________________ 25%

Percentage of retention _________________ 13.3 ____________________________________ %

Limit of Retention Money _______________ 13.3 __________________ % of the Contract Price

If Sub-Clause 13.5 applies:

Plant and Materials for payment

when delivered to the Site _______________ 13.5 __________________________________ [list]

Minimum amount of InterimPayment Certificates ___________________ 13.6 __________________ % of the Contract Price

If Sub-Clause 13.15 applies:

Payments in Local and Foreign Currencies 1.1.5.3

& 13.15

Currency Unit Percentage payable

In such Currency

Rate of exchange : number

of Local per unit of Foreign

Local: ________________ [name]

Foreign: ________________ [name]

________________[name]

__________________________

__________________________

__________________________

1.000

___________________________

___________________________



4

If there are Provisional Sums:

Percentage for adjustment

of Provisional Sums ________________ 14.5(b) _________________________________ %

Amount of insurance for design __________ 18.1 ___________________________________

Amount of third party insurance __________ 18.3 ___________________________________

Periods for submission of insurance: _______ 18.5

(a) evidence of insurance ___________ _______________________________ days

(b) relevant policies _______________ _______________________________ days

Number of members of

Dispute Adjudication Board _____________ 20.3 ___________________________________

Member of Dispute Adjudication Board

(if not agreed) to be nominated by _________ 20.3 The President of FIDIC or a person

appointed by such President

Arbitration rules _______________________ 20.6 ___________________________________

Number of arbitrators __________________ 20.6 ___________________________________

Language of arbitration _________________ 20.6 ___________________________________

Place of arbitration _____________________ 20.6 ___________________________________

If ICC rules are NOT to apply - Either:

Arbitration rules to be administered by 20.6 ___________________________________

Or: Arbitrator (if not agreed) to be nominated by

If there are Sections:

Definition of Sections

Description

(Sub-Clause 1.1.6.9)

Value (percentage of

Contract Price)*

Time for Completion

(Sub-Clause 1.1.3.4)

Liquidated Damages

(Sub-Clause 8.6)

___________________

___________________

___________________

___________________

___________________

___________________

______________________

______________________

*These percentages shall also be applied to the first half of the Retention Money under Sub-Clause 13.9

Initials of signatory of Tender __________________________________________________________________



AGREEMENT

This Agreement made the __________________ day of _________________ 20___________

Between ______ of ________________________________ (hereinafter called “the Employer”) of the one part,

and ________ of __________________________________(hereinafter called “the Contractor”) of the other part

Whereas the Employer desires that the Works known as __________________________ should be designed and

executed by the Contractor, and has accepted a Tender by the Contractor for the design, execution and

completion of such Works and the remedying of any defects therein,

The Employer and the Contractor agree as follows:

1. In this Agreement words and expressions shall have the same meanings as are respectively assigned to them

in the Conditions of Contract hereinafter referred to.

2. The following documents shall be deemed to form and be read and construed as part of this Agreement:

(a) The Letter of Acceptance dated _____________

(b) The Employer’s Requirements(c) The Tender dated ___________

(d) The Conditions of Contract (Parts I and II)

(e) The Addenda nos ___________

(f) The completed Schedules, and

(g) The Contractor's Proposal.

3. In consideration of the payments to be made by the Employer to the Contractor as hereinafter mentioned, the

Contractor hereby covenants with the Employer to design, execute and complete the Works and remedy any defects

therein, fit for purpose in conformity with the provisions of the Contract.

4. The Employer hereby covenants to pay the Contractor, in consideration of the design, execution andcompletion of the Works and the remedying of defects therein, the Contract Price or such other sum as may

become payable under the provisions of the Contract at the times and in the manner. prescribed by the

Contract.

In Witness whereof the parties hereto have caused this Agreement to be executed the day and year first before written

in accordance with their respective laws.